The National Bank of Ras Al Khaimah (RAKBank) has successfully executed an international remittance using China’s digital Yuan (eCNY) in exchange for the Digital Dirham, the UAE’s Central Bank Digital Currency (CBDC). This transaction showcases the potential of CBDCs in transforming cross-border payments by providing real-time transactions with improved transparency and reduced costs. RAKBank is among the first banks globally to be part of a live CBDC platform, highlighting its readiness to transact in this new digital landscape.
Project mBridge is an innovative initiative aimed at addressing inefficiencies in cross-border payments, such as high costs, slow processing times, and operational complexities. Launched in 2021, it is a collaborative effort involving the Central Bank of the UAE (CBUAE), the BIS Innovation Hub, the Bank of Thailand, the Digital Currency Institute of the People’s Bank of China, and the Hong Kong Monetary Authority. The core of mBridge is a multi-central bank digital currency platform built on distributed ledger technology (DLT), enabling real-time peer-to-peer cross-border payments and foreign exchange transactions securely through the mBridge Ledger.
RAKBank’s participation in the mBridge platform and the execution of its first-ever central bank digital currency international payment demonstrate the bank’s digital prowess and its commitment to innovation in the financial sector. Raheel Ahmed, Group CEO of RAKBank, emphasized the bank’s dedication to pushing boundaries and strengthening its position as a leading retail and commercial bank in the UAE with a growing international payments segment. This milestone signifies a significant advancement in the global financial landscape and showcases RAKBank’s cutting-edge digital capabilities.
Vikas Suri, Co-Head of Wholesale Banking Group at RAKBank, noted that the successful transfer of eCNY to a correspondent in China is a game-changer, as it is one of the first UAE-led foreign currency transfers executed in local currencies without involving a third currency and without using traditional payment rails. This achievement sets the stage for instant blockchain-based CBDC exchanges with payment versus payment, transforming the approach to international payments. RAKBank’s future plans involve leveraging mBridge to support the China-UAE business corridor for clients, enhancing cost-effectiveness and expediting remittances.
In conclusion, RAKBank’s groundbreaking transaction using China’s digital Yuan highlights the transformative potential of CBDCs in revolutionizing cross-border payments. Project mBridge plays a crucial role in addressing the inefficiencies in the current payment system, paving the way for real-time, secure, and cost-effective cross-border transactions. The collaboration between various central banks and financial institutions in developing this innovative platform demonstrates a commitment to driving digital transformation in the financial sector. As more banks embrace CBDCs and join platforms like mBridge, the future of cross-border payments holds immense promise for efficiency, transparency, and accessibility in the digital age.
