Test for cross-border digital coin transfers successful

The Bank of International Settlements announced the successful completion of a test between the central banks of four nations to transfer central bank digital coins between them.

A CBDC is basically a government-backed virtual currency, which stands in contrast with cryptocurrencies that were specifically built to not need backing from a sovereign power. Other nations are already experimenting internally with such a thing, including China, while others, such as the U.S., are considering doing the same.

The BIS experiment involved the Hong Kong Monetary Authority, the Bank of Thailand, the Digital Currency Institute of the People's Bank of China and the Central Bank of the United Arab Emirates, which tested out an experimental blockchain network called mBridge. The network was built by central banks to support real-time, peer-to-peer, cross-border payments and foreign exchange transactions using CBDCs. Under their supervision, 20 banks in their respective regions used the mBridge platform to conduct 164 payment and foreign exchange transactions totaling over $22 million over six weeks, directly on the platform. Overall, the test was considered a success.

"Financial exclusion is not just a problem for individuals; it is also affecting economies," said Cecilia Skingsley, head of the BIS Innovation Hub, in a statement. "This project makes important strides toward developing a platform that has the potential to foster more inclusive and efficient payments systems that will benefit those making and receiving payments in different currencies and jurisdictions as well as the overall functioning of the global financial system."

The BIS will continue to work on this and similar projects to explore the user requirements, technical specifications and governance framework needed for interoperable CBDCs. The mBridge project team will continue building the technology and testing it to create a product with enough features to be used by early adopters in the year ahead and a production-ready system thereafter.

This is only the most recent experiment regarding a possible CBDC network. The Society for Worldwide Interbank Financial Telecommunication, the organization that maintains the network over which most interbank transfers occur, successfully completed an experiment of its own earlier this month.