The Bank for International Settlements (BIS) released a colorful and fact-filled Project mBridge update on Oct. 31. The publication combines technical and promotional discussions in a shift of tone as the project prepares to become a minimum viable project for commercial launch next year.
The update gathers a significant amount of information about the central bank digital currency (CBDC) bridge that had been scattered or completely unavailable until now. The governance structure is explained in general terms, and technical details are slipped into the text at a level of readability that makes it accessible to non-specialists.
A next envisaged stage in Project #mBridge is whether the tested platform can become a minimum viable product, with continued work on the technology, legal and governance, and welcoming new participants and use cases. Read the new report: https://t.co/dzQCxz9UYL #BISInnovationHub pic.twitter.com/4ZtHDrERK8
— Bank for International Settlements (@BIS_org) October 31, 2023
The update explains the project’s use of the Dashing consensus algorithm, which was introduced earlier this month and had previously only been announced in Chinese-language media. It describes it as:
“A Byzantine Fault Tolerance (BFT) consensus protocol that uses proofs of partial confirmation of a block validation to reduce the time needed to achieve consensus and to improve the overall protocol performance.”
The use of legal entity identifiers for Anti-Money Laundering and Countering the Financing of Terrorism is also new information.
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The technical information is sandwiched in text that is, at least by the standards of central banking, blatantly promotional:
“With Project mBridge, the number of steps [in cross-border payments] can be significantly reduced by allowing direct, bilateral connectivity between the payee’s and payer’s local banks supported by interoperability with participants’ domestic payment systems.”
One of the bigger revelations in the update is a list of observer organizations in the project. Their presence was known before but never specified. There are 25 observers, which include central banks and organizations such as the International Monetary Fund and Federal Reserve Bank of New York. Eleven of them are active in the project’s sandbox. Their identities were not revealed.
Project mBridge was initiated in 2021 by the central monetary authorities of China, Hong Kong, Thailand and the United Arab Emirates in partnership with BIS. It announced plans for its commercial launch in September. This publication calls "see[ing] if the platform tested can evolve to become a Minimum Viable Product" the project's next step.
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