The People’s Bank of China (PBC), the central bank of the country, has joined a multilateral project that will explore the use of digital currency in cross-border payments.

The project, dubbed multilateral central bank digital currency (CBDC) ‘bridge’ research project (m-CBDC Bridge), was jointly rolled out by the digital currency institute of PBC, the Hong Kong Monetary Authority (HKMA), the Central Bank of Thailand, the Central Bank of the UAE.

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The participants will work together to assess the capabilities of distributed ledger technology (DLT) by developing prototypes to enable real-time cross-border foreign exchange payment-versus-payment transactions.

Additionally, it will facilitate domestic and foreign currency exchanges in a cross-border context.

PBC was quoted by the Global Times as saying: “It will further build a favourable environment for more central banks in Asia and other regions to jointly study and improve the cross-border payment capabilities of the financial infrastructure to solve the problems of low efficiency, high costs and low transparency in cross-border payments.”

The project seeks to determine the potentiality of DLT in improving the infrastructure for cross-border payments and facilitate international fund transfers.

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It is also expected to address regulatory complexities, high costs and other inefficiencies.

Recently, SWIFT, the global system for financial messaging and cross-border payments, established a financial gateway joint venture (JV) with subsidiaries of the Chinese central bank.

These subsidiaries include the China National Clearing Center (CNCC), and the Digital Currency Research Institute.