Saudi Arabia Initiates Cross-Border CBDC Payments under the mBridge Initiative

In an effort to improve cross-border payments via digital currencies issued by central banks, Saudi Arabia has joined the mBridge initiative (CBDCs).

As per a recent story published in China Daily, the Saudi Central Bank (SAMA) has declared its intention to become a full member in the mBridge program. This development may facilitate a rise in local currency transactions in the oil trade between Saudi Arabia and China.

The mBridge Platform will launch the MVP stage.

The Bank for International Settlements launched Project mBridge, an international digital currency network. The Digital Currency Institute of the People’s Bank of China, the Bank of Thailand, the Central Bank of the United Arab Emirates, and the Hong Kong Monetary Authority are the founding central banks.

The mBridge project has reportedly reached the minimum viable product (MVP) level, per a BIS release. In order to further expand the platform and showcase its full potential, this milestone welcomes private sector companies to submit new ideas and applications.

According to the report, the mBridge project’s MVP stage means that commercial banks in the six participating members can now utilize it for actual cross-border payment purposes.

The BIS announced that over 26 official institutions, including the World Bank, the European Central Bank, and the International Monetary Fund, are taking part as observers in addition to the Saudi Central Bank becoming the sixth full participant.

First Cross-Border CBDC Payment in the UAE

Using digital dirham and digital yuan, the United Arab Emirates and China completed their first cross-border CBDC transaction in February, valued at a combined $13.6 million.

The use of digital currencies in multilateral financial exchanges was first presented by the mBridge transaction, which took place during the Central Bank of UAE’s 50th anniversary celebration. Zhang Yiming, the Chinese ambassador to the UAE, and Mansour bin Zayed Al Nahyan, the vice president and deputy prime minister of the UAE, were present at the function.

During the celebration, Mansour urged Zhang to work with him to launch the cross-border payment and introduce the CBDC platform, which would be the first real-time transaction after the Bridge’s phase one pilot in 2022.