The Bank of Thailand (BOT) revealed the study results of Wholesale CBDC pilot testing, which reduced costs and cross-border transaction times from 3-5 days to “digits of a second.”
According to Mathee Supapongse, Deputy Governor of the Bank of Thailand (BOT), the job is being done by the BOT in collaboration with the Hong Kong Monetary Authority (HKMA), the Central Bank of the United Arab Emirates (CBUAE), the People’s Bank of China’s Digital Currency Institute (PBCDCI), and the BIS Innovation Hub Hong Kong Center (BISIH).
The first pilot using wholesale central bank digital currencies (Wholesale CBDC) for real-value cross-border payment transactions was successfully completed as part of the Multiple Central Bank Digital Currency Bridge (mBridge) Project, which is the next phase following Project Inthanon-LionRock Phase 2 in 2021.
From 15 August to 23 September 2022, the mBridge pilot covered three transaction types: (1) issuance and redemption of CBDC between commercial banks and central banks, (2) cross-border payment in local CBDC between commercial banks, and (3) cross-border exchange of local CBDC against foreign currency CBDC between commercial banks.
The pilot included 20 commercial banks from four jurisdictions, including five from Thailand1, who collectively executed exchange transactions and cross-border fund transfers in four different currencies on behalf of their corporate clients on the mBridge platform to support international trade.
The total value of the 164 cross-border transactions conducted during the pilot was more than US$22 million (equivalent to THB 827 million). More information is available in the project report titled “Project mBridge: Connecting Economies Through CBDC.”
By eliminating the correspondent banking network, the mBridge platform demonstrated increased efficiency of cross-border transactions using multi-currency CBDC compared to the current system, resulting in:
- a significant reduction in cross-border transfer times from 3-5 days to several seconds;
- enabling direct peer-to-peer linkages between participating banks, potentially lowering cross-border costs;
- lower settlement risk; and
- facilitating the use of local currencies in international payments.
Moving forward, the mBridge project will continue to develop and test the technology in order to improve existing functionalities and add new features to the platform, all while considering policy, regulatory, and legal implications. Following that, the BOT will consider conducting additional experiments in more real-world settings.
