Sibos 2024: Project mBridge and CBDCs may boost global trade

A packed conference room with barely any standing room and little to no space for additional seating: This was the turnout for a special panel focusing on Project mBridge – a central bank digital currencies (CBDCs) cross-border payment system – during the ongoing Sibos 2024 conference at the China National Convention Center in Beijing.

CBDCs are the digital form of a country's fiat currency and have become increasingly prevalent across banking systems around the world. Instead of printing money, central banks issue electronic coins or accounts backed by the government's full faith and credit, using cutting-edge technologies such as distributed ledger technology, including blockchain.

Statistics show that 134 countries and currency unions, representing 98 percent of global GDP, are exploring CBDCs. In May 2020, that number was only 35. Currently, 66 countries are in advanced phases of exploration – this includes development, pilot or launch.

According to a report published by global consulting firm McKinsey & Company, one expected trend in the next five years is that "CBDCs will set the baseline for digital currencies," placing the digital asset in a very important position.

There are various reasons for central banks to issue digital currencies, including increasing efficiency in payments and lowering transaction costs. However, maintaining liquidity between central banks presents a new challenge. Given the increasing interest in CBDCs, initiatives like Project mBridge are becoming crucial. That is why Project mBridge was established to promote cross-border money flow.

Project mBridge is a cross-border payment initiative now involving Thailand, China, Hong Kong, the United Arab Emirates, Saudi Arabia and the Bank for International Settlements Innovation Hub. The project aims to tackle some of the key inefficiencies in cross-border payments, including high costs, low speeds and operational complexities.

In addition to Project mBridge, there are nearly 20 other cross-border CBDC projects aimed at facilitating money flow among different regions. The digital euro created by the European Central Bank and the e-CNY created by the People's Bank of China have in recent times gained traction.

But analysts believe that more needs to be explored and tested, specifically when it comes to how easy it is for money to flow across borders.

According to the International Monetary Fund's latest world economic outlook, world trade growth is projected to be 3 percent in 2024 and 3.3 percent in 2025, posing further challenges for the global payment system as transactions are expected to rise.

Sibos 2024 may bring good news for global trade. "Cooperation," "interoperability" and "connection" were among the three most frequently mentioned keywords at the conference. Leaders of central banks from various regions, tech experts from finance-related companies and regulators all gathered in Beijing to discuss solutions for the future of payments.

With numerous discussions and debates on digital currencies, tokenization, instant payments and CBDCs, the world of instant cross-border payments may come sooner than later to better facilitate international trade.