The Central Bank of the United Arab Emirates (CBUAE) and the Hong Kong Monetary Authority (HKMA) have jointly announced the exchange of a Memorandum of Understanding (MoU) to enhance collaboration on fintech between the two authorities, with a view to strengthening co-operation between the two jurisdictions in promoting innovative financial services and regulatory development.
The MoU was signed by H.E. Abdulhamid M. Saeed Alahmadi, Governor of the CBUAE and Mr Eddie Yue, Chief Executive of the HKMA.
H.E. Abdulhamid M. Saeed Alahmadi, said: “We are very pleased to embark on this journey with an esteemed institution as the HKMA. CBUAE has recently completed a wholesale CBDC proof of concept project with the Saudi Central Bank to settle domestic and cross-border transactions using central bank money on a distributed ledger technology. Building on this momentum, CBUAE is very excited to be able to use the experience gained so far and participate in the m-CBDC Bridge project. The MoU will certainly set the stage for future joint experimentation of digital innovation between CBUAE and the HKMA.”
Mr. Yue, said: “The HKMA has been making considerable efforts to expand our international fintech network to include counterparts in the Middle East, and CBUAE is naturally a valuable partner of our network. We anticipate that a lot of synergies will arise from the strengthened collaboration under the MoU, and look forward to the CBUAE’s joining of our CBDC project to enrich, and bring in new thoughts and perspectives for, the project.”
In similar news HKMA, CBUAE, the Bank of Thailand (BOT), and the Digital Currency Institute of the People’s Bank of China (PBC DCI), have announced the joining of the CBUAE and the PBC DCI to the second phase of Project Inthanon-LionRock1, a central bank digital currency project for cross-border payments initiated by the HKMA and the BOT. This joint effort is strongly supported by the Bank for International Settlements Innovation Hub Centre in Hong Kong and the project has been renamed as “m-CBDC Bridge”.
Building on the experience learnt from Project Inthanon-LionRock, the m-CBDC Bridge project will further explore the capabilities of distributed ledger technology (DLT), through developing a proof-of-concept (PoC) prototype, to facilitate real-time cross-border foreign exchange payment-versus-payment transactions in a multi-jurisdictional context and on a 24/7 basis. The m-CBDC Bridge project will also explore business use cases in a cross-border context using both domestic and foreign currencies.
Following the joining of the CBUAE and the PBC DCI, the m-CBDC Bridge project will further foster a conducive environment for more central banks in Asia as well as other regions to jointly study the potential of DLT in enhancing the financial infrastructure for cross-border payments. Eventually, the outcome is expected to alleviate the pain points in cross-border fund transfers, such as inefficiencies, high cost and complex regulatory compliance. Most importantly, the participating central banks will take into account the results of the PoC work to evaluate the feasibility of the m-CBDC Bridge project for cross-border fund transfers, international trade settlement and capital market transactions.