mBridge, the wholesale platform for cross border CBDC payments is preparing to launch ‘very soon’. That’s according to Eddie Yue, the CEO of the Hong Kong Monetary Authority (HKMA), one of the four participant central banks. The others are China, Thailand and the UAE.
Mr. Yue described the planned launch as a minimum viable product that will pave “the way for the gradual commercialisation of mBridge.” When the central banks and the Bank for International Settlement (BIS) shared the results of the last pilot a year ago, several additional central banks had observer status. The key findings were it enables faster, cheaper, more transparent payments.
There’s a good chance they kept the group small precisely so the platform could reach production quickly. Large consortia are notoriously slow. From a decision making perspective, the senior group is even tighter than it looks, given the UAE representative, Shu-Pui Li, spent 17 years at the HKMA.
The observer central banks were the Philippines, Malaysia, Indonesia, Korea, Sweden, and Israel. Staff from the London BIS Innovation Hub and Federal Reserve Bank of New York also observed.
Update: Today China’s Securities Times revealed that Tencent, the owner of the WeChat Pay and WeChat app is a participant in mBridge.
Fragmenting payments
During a speech at China’s Bund conference, Mr. Yue separately discussed the waning support for globalization. “We now seem to be moving down the path towards fragmentation, as practical and pragmatic economic considerations are giving way to protectionism and cross-border restrictions,” he said. He added that China’s role in regional supply chains will become even bigger.
“As trade and supply chain linkages in Asia become more integrated, there is greater scope to use local currencies in regional trade settlement and beyond. Indeed, an increasing number of economies, including those in the ASEAN, want to use the RMB to settle their trade with China,” said Mr. Yue.
Whether or not these moves impact the dominance of the U.S. dollar remains to be seen.
However, currently SWIFT is the dominant infrastructure in cross border payments. mBridge’s launch – if it gets traction – could be a big step towards the fragmentation of global payments.
