Cross-border payments using digital currencies issued by China, Hong Kong, Thailand, and the United Arab Emirates have been trialed by their monetary authorities.
The Bank for International Settlements (BIS) Innovation Hub Hong Kong Centre has announced that the pilot was successfully completed.
Financial News, the official newspaper of the PBOC, reports that the Industrial and Commercial Bank of China, the country’s largest lender, and its Abu Dhabi brand and ICBC (Asia) subsidiary in Hong Kong participated.
Digital Currencies Payments Processed Through Mbridge
Transactions in real-value were covered in the tests, which ran from Aug. 15 to Sept. 23.
Payments were processed through a distributed ledger platform called Mbridge, a project launched by the Hong Kong Monetary Authority, the Bank of Thailand, and the BIS Innovation Hub in 2019. Then, in 2021 the People’s Bank of China and the Central Bank of UAE joined.
The platform was used by 20 commercial banks to settle various kinds of payments for corporate customers, mainly cross-border trade, according to Linkedin posts by the BIS.
“Over $12 million in value was issued onto the platform facilitating over 160 cross-border payments and FX transactions totalling more than $22 million in value.”
Testing CBDCs as Well
Meanwhile, the Zhejiang branch of Bank of China together with HSBC and Siam Commercial Bank made payments for two high-tech companies in the province using digital yuan (eCNY).
According to the South China Morning Post, other currencies are also being tested, aside from China, which is expanding the eCNY pilot project. The report also noted that Hong Kong, the United Arab Emirates, and Thailand are also testing payments with central bank digital currencies (CBDCs).
Additionally, the Hong Kong-based publication remarked that banks settling directly without the greenback would undermine the US dollar’s role in foreign trade.