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China has concluded the experimental phase of its advanced blockchain system dedicated to the Currency Bridge, a project that allows atomic and cross-border payments with real-time forex settlement, according to a Chinese official.

Mu Changchun, who leads the Digital Currency Institute of the People’s Bank of China, unveiled insights into the CBDC project, termed ‘Money Bridge’, during an important talk at the FinTech Symposium, part of Hong Kong’s Science and Technology Week.

The ‘Money Bridge’ initiative leverages a bespoke blockchain architecture called the mBridge Ledger (mBL), purpose-built for this project. The mBL is engineered to provide integral functions such as concurrent forex and payment settlements, management of digital wallets, and the preservation of user privacy.

Progress in mBridge’s Pilot Testing

This endeavor began in February 2021 when the Digital Currency Institute pooled resources with various central banks, including the Hong Kong Monetary Authority, the Bank of Thailand, and the Central Bank of the United Arab Emirates. These institutions are collaborating under the Innovation Hub’s oversight to investigate and implement CBDCs in transnational payment systems.

During the pilot testing phase between August and September 2022, eight commercial banks from the involved nations executed the first transactions using mBridge. This trial featured nine cross-border payment and forex trades totaling more than one million yuan, with transactions in digital yuan accounting for 5.46%, predominantly used in cross-border trade and bank-to-bank transactions.

Highlighting the mBridge system’s integrity, Mu Changchun pointed out that its code is completely open to examination and can be audited by all participating central banks and monetary authorities. This system is designed to ensure optimal transparency, security, and efficiency. The Money Bridge project stands as a testament to the evolving landscape of CBDCs and their role in the modernization of international financial transactions.