The first cross-border digital dirham payment was completed by Sheikh Mansour Bin Zayed Al Nahyan, Chairman of the Board of the Central Bank of the UAE, using the Mbridge platform, a central bank digital currency (CBDC) liquidity and interconnection tool. The settlement involved sending 50 million dirhams ($13.6 million) directly to China.
UAE Completes First Digital Dirham Settlement Using Mbridge
UAE has completed the first payment of its central bank digital currency (CBDC), the digital dirham, using the Mbridge platform, a CBDC interconnection platform. The settlement, which involved the disbursement of 50 million digital dirhams ($13.6 million), was completed by Sheikh Mansour Bin Zayed Al Nahyan, Chairman of the Board of the Central Bank of the United Arab Emirates (UAE), and sent this amount directly to China.
The transaction was completed during the fiftieth-anniversary celebration of the Central Bank of UAE, with Sheikh Mansour emphasizing the focus on making the UAE a financial hub with the help of the central bank.
The UAE, alongside China, Hong Kong, and Thailand, is part of the Mbridge initiative, a joint effort to simplify the exchange of digital currencies between the central banks of the group and streamline payments using non-traditional and distributed rails. Mbridge, with the participation of the Bank of International Settlements (BIS), aims to serve a market of over $560 billion, the combined amount of the goods exchanged by these countries in 2021.
Some nations have become concerned about the development of this initiative, expected to show a minimum-viable product later this year, due to how it would render the action of unilateral sanctions useless against any of the countries integrating it.
In particular, nations fear that Mbridge, when implemented and utilized, would empower the digital yuan to become a viable alternative to the U.S. dollar in the global trade arena by leveraging almost instant and low fee-based payment rails, leaving systems like SWIFT at a disadvantage.
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