Rich Turrin: mBridge Pilot Demonstrates How CBDC Framework Can Avoid Sanctions (Part 1)

LinkedIn Newsletter - Cashless | Richard Turrin | Oct 30, 2022

mBridge transferring $22m in CBDCs cross-border is [BIG DEAL] in the payment world and most of the world slept through it! Sanctions will never be the same.

• mBridge is the largest cross-border CBDC pilot to date, with over US$ 12 M of CBDCs issued onto the platform, over US$ 22 M of payments, and FX PvP instantly settled across borders.  Over 20 of the region’s largest commercial banks participated in settling REAL VALUE on behalf of corporate clients. The settlements were for international trade and interbank transfers. The countries represented, China, Hong Kong, UAE, and Thailand which represent 19% of global merchandise trade!

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• Sanctions: MBridge's biggest impact will be on sanctions, as it sets up a decentralized blockchain (DLT) system that is sponsored by the supporting central banks and is not responsible for sanctions enforcement.
  • Each of the central banks supports a node on the platform and the platform simply transfers CBDCs between accounts. Sanctions are enforced by the individual commercial banks that use the system before they are put on the mBridge network. The users enforce sanctions, not the network.
  • Compare this with SWIFT which enforces sanctions on all network participants. Sanctions are built-in to the network, unlike mBridge. This is a revolution in payment transfers as the network is politically neutral.
• Can mBridge by sanctioned by the US or EU?
  • The decentralized nature makes the entity itself pretty much sanction-proof. What would you sanction? The bridge is decentralized and run by participating central banks, while it may have a small office, there is no massive presence to sanction.

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• Takeaways: 
  • MBridge is the most important piece of CBDC architecture being built today
  • It shows us exactly how CBDCs will be used in cross-border transfers to reduce cost and increase speed and efficiency.
  • MBridge is going into production look for it to go live end of 2023.
  • Cross-border CBDC transfers are not 20 years away but 1-2, showing that the future is coming faster than you think
  • Do you think the Fed still thinks there is no first-mover advantage in CBDCs?

Continue to the full article --> here

Download 50 page PDF mBridge project report on 'Connecting Economies Through CBDCs' --> here

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