The UAE Central Bank Executes its First Cross-Border Digital Dirham Transfer to China
The Central Bank of the United Arab Emirates (UAE) achieved a significant milestone on January 29 by conducting its first cross-border digital dirham transfer. The transfer, worth 50 million dirhams (equivalent to $13.6 million), was made to China using the mBridge central bank digital currency (CBDC) platform.
Sheikh Mansour, the chairman of the board of the Central Bank of the UAE, oversaw the transfer during the golden jubilee celebration of the bank’s establishment. This event not only marks a major milestone for the UAE but also represents a significant step forward in the global advancement of digital currencies.
The mBridge platform, launched in 2021, is a collaborative effort between the central monetary authorities of China, Hong Kong, Thailand, and the UAE, in partnership with the Bank for International Settlement (BIS). It is the only international collaborative partnership that includes China. The first pilot of Project mBridge was completed in September 2022, and it has since onboarded multiple commercial banks from each participating nation to develop its infrastructure and technology.
mBridge utilizes a single-platform, direct-access architecture and employs the HotStuff+ consensus mechanism to facilitate real-time, peer-to-peer transactions. This innovative approach enables faster transfers of each participant country’s national digital currency, demonstrating the potential of CBDCs in streamlining cross-border payments.
The use of blockchain and distributed ledger technology for digital currencies has gained significant interest worldwide. According to a BIS report, nearly 90% of central banks globally are exploring the adoption of CBDCs. Among these, 11 countries have already launched a CBDC, 15 are in the pilot stage, and 26 are in the development phase. This trend indicates a growing acknowledgment of the potential benefits and efficiencies that CBDCs can bring to the global financial system.
The success of the UAE’s digital dirham transfer via mBridge highlights the increasing integration of blockchain technology in national and international finance, potentially reshaping the future of money transfer and economic transactions globally.