Project mBridge, the multi-central bank digital currency arrangement that connects different jurisdictions to a single common technical infrastructure, reached minimum viable product stage in June 2024, inviting further international participation.
The project originated from the collaboration between the Bank of Thailand and the Hong Kong Monetary Authority. In 2021, the project further combined efforts from the Bank for International Settlements’ Innovation Hub Hong Kong Centre, Bank of Thailand, Central Bank of the United Arab Emirates, Digital Currency Institute of the People’s Bank of China, HKMA and, as of June this year, the Saudi Central Bank.
Katie-Ann Wilson, managing director of OMFIF’s Digital Monetary Institute, sat down with Yvonne Tsui, senior fintech director at the HKMA, to explore what reaching the MVP stage means for the project, how the private sector should get involved and further questions around its expansion.
Katie-Ann Wilson: Project mBridge has reached MVP stage. Can you tell us what that means?
Yvonne Tsui: MVP is the abbreviation for ‘minimum viable product’. It refers to a basic version of a product, containing enough features to be launched and used by early adopters. Participating jurisdictions can use the mBridge MVP platform to undertake real-value transactions, subject to their own preparedness.
The mBridge MVP stage enables the project team to gather feedback from early adopters on an ongoing basis, which in turn allows us to work on iterative enhancements before the platform enters full production stage.
KAW: We understand the private sector will be getting involved in further enhancing mBridge MVP. What kind of work will they be doing?
YT: Given the high compatibility of the mBridge MVP platform, it could serve as a testbed for add-on technology solutions, such as solutions that could support foreign exchange and liquidity as well as anti-money laundering and combatting the financing of terrorism compliance to supplement the operation of mBridge.
In addition, the MVP platform could act as a testbed for new use cases, interoperability with other platforms, as well as evaluating potential synergies with innovative private sector solutions. The project team is now inviting private sector firms to propose solutions and use cases by completing the participation form prepared by the BIS Innovation Hub.
KAW: Can you expand on the governance structure for Project mBridge. How do central banks’ decisions factor into this multi-CBDC initiative?
YT: The platform is supported by a fit-for-purpose governance structure consisting of a steering committee and five subcommittees: business, legal, policy, risk and compliance, and technology. The steering committee formulates strategies and policies, while the five subcommittees provide expert guidance and support to the steering committee. As the project continues to evolve and the network continues to expand, the governance structure may change from time to time as needed.
At present, given that the project is in the initial MVP stage, decisions at SteerCo level are made based on a consensus-focused approach. Similar to the governance structure, this arrangement may evolve as the project team gathers more experience during the MVP stage.
KAW: What were the trade-offs in using a single system for mBridge over other interoperability models?
YT: mBridge’s single system can achieve interoperability with domestic traditional clearing systems and participants from multiple jurisdictions can directly reach one another on a single, integrated technical platform. However, building this single system model was challenging. This is because, in principle, all participants would need to accept the same rulebook, reaching an agreement in various legal and governance aspects. The process required a lot of effort.
That said, it has been proven that, if we embrace new governance and regulatory approaches with an open mind and continue to strengthen international collaboration, these challenges can be overcome. It is like choosing a difficult hiking trail. It is only when you reach a certain height that you see the beautiful scenery.
KAW: How extensive do you expect the geographic scope to get? Do you expect to see other regions emulating the mBridge model?
YT: The project already has wide geographical representation in the sense that the observing members come from almost every continent – Africa, Asia, Oceania, Europe, North America and South America. Now that the project has reached MVP stage, we believe both central banks and commercial banks that are interested in the project would approach the project team to understand more.
CBDCs are gaining global momentum, with nine out of 10 central banks exploring them, and more than half are now developing or running pilot projects. If other regions are trying to build a platform similar to mBridge in the future, we would very much welcome it, and would like to see these platforms interoperable with one another.
This conversation contains extracts from the conversation on Project mBridge at the OMFIF’s Digital money summit 2024 in London. For more, see the Digital Monetary Institute Journal, summer 2024 edition.
