Using the mBridge network, the United Arab Emirates and China sent $13.6 million (50 million dirhams) in Renminbi, the first ever cross-border transaction of its kind.
It was the first ever cross-border central bank digital currency (CBDC) transaction using the Renminbi (RMB), and it was carried out by the UAE and China. Using the mBridge infrastructure, the payment transferred 50 million dirhams and RMB between China and the UAE. This comes at a time when the dollar’s dominance in Asia is being challenged.
In the first ever real-time payment on their bespoke interbank network, the People’s Bank of China and the UAE Central Bank exchanged 50 million dirhams ($13.6 million). The first trial run of the network was in 2014, and it connects the central banks of Thailand, the United Arab Emirates, China, and Hong Kong.
A high-profile event in Abu Dhabi yesterday saw the completion of two deals. Saudi Prince Mansour and Chinese Ambassador Yiming Zhang handed China a total of fifty million dirhams. The Chinese central bank was processing the RMB digital remittance simultaneously.
The mBridge blockchain infrastructure, which connects the central banks of China, Hong Kong, Thailand, and the United Arab Emirates, processed the first real-time payment with this transaction. A 2014 pilot episode aired on the network. Nevertheless, its significance has increased due to China’s efforts to de-dollarize in response to escalating tensions with the US.
However, the mBridge network does not technically exist in a live state. Although plans call for a deployment somewhere around the middle of the year, the Bank for International Settlements has said that it is premature to specify deadlines. Issues with liquidity and foreign currency charges must yet be resolved in the project.
Many nations have easier access to US dollars than any other currency, which is a problem when attempting to de-dollarize. As of December of last year, dollars accounted for nearly 58% of the central bank’s foreign reserves. Countries that have a lot of dollars and deal internationally in dollars have less counterparty risk because of this tendency.