China Central Bankers Stress Mutual Trust for mBridge Project

A deputy governor of China’s central bank says that the countries working together to build mBridge must build trust and learn about each other’s legal frameworks

A report from SCMP on October 23 says that Lu Lei, deputy governor of the People’s Bank of China, said that countries working together to build the central bank digital currency platform mBridge will need to follow each other’s money rules if they want their cross-border payment tool to work.

At Sibos Beijing on Oct. 23, he said there should be “a balance between the rights and responsibilities of participating jurisdictions while preventing disruptions to the international monetary and financial systems.”

The Money Bridge project, also called mBridge, is a cross-border CDBC project built on a blockchain made just for this project.

The central banks of China, Hong Kong, Thailand, and the United Arab Emirates are working together. Part of the CDBC project is also the Hong Kong Monetary Authority.

The project was first discussed in 2021 and was supposed to start in 2024.

Lu said that mBridge should be able to eliminate problems after cross-border payments, not make new ones. In addition, it should be able to reduce the division of the market that is already there.

“We also shouldn’t add more geopolitical and compliance costs while lowering the costs of cross-border payments,” Lu said.

He said that mBridge’s job is to solve problems and provide services that banks aren’t able to do, like cross-border payments and money transfers for online shopping.

Lu thinks the cross-border CDBC project will make it easier for people in Asean and the Belt and Road Initiative to work together because of “close trade ties and relatively stable geopolitical conditions.”

Zhou Xiaochuan, head of the PBOC, said that what mBridge might mean for the dominance of the US dollar is “very much up to the US government itself.”

“The exchange rate between mBridge and the US dollar or other currencies depends on how technology develops and how Western countries handle their economies,” Zhou said.

In November 2023, a Chinese source said that testing for mBridge was over.