A new bridge to the multi-currency world

There is now a fast and secure platform for transactions in local currencies that sidesteps the US dollar.

- Vikram Khanna

If you want to transfer, say, $1,000 from your bank in Singapore to a bank in Brazil, it would take three to five working days, and involve charges from your Singapore bank, intermediary banks, and the receiving Brazilian bank. It's also likely that your Singapore dollars will first have to be converted to US dollars and then into the Brazilian currency, which will also incur a charge.

But there is now a new system in place which (if Singapore and Brazil join) can enable Singapore dollars to be transferred from your local bank to the Brazilian bank instantly, with no intermediaries, no conversion to US dollars and at a fraction of the cost you would normally be charged.

The system is called mBridge, and it enables cross-border payments in local currencies, without the use of the US dollar. Essentially, it's a bridge between different countries' central bank digital currencies (CBDCs), with the "m" denoting “multiple", because it's a multi-currency platform.

TRIED, TESTED AND READY TO USE

Created by the Bank for International Settlements (BIS) – the central bank of central banks – mBridge was initially trialled by the central banks of China, Hong Kong, Thailand and the United Arab Emirates (UAE), starting in 2021. After doing more than 150 transactions, a "proof of concept" was established. In June, the BIS announced that a "minimum viable product" was ready, which means a basic version is fit for use by early adopters. The system, in other words, is up and running.

Saudi Arabia recently joined the group and more than 30 institutions from every continent have signed up as observers. Among Asia-Pacific central banks, they include those from Australia, Cambodia, Macau, Malaysia, India, Indonesia, Nepal, the Philippines and South Korea. The International Monetary Fund (IMF), World Bank, European Central Bank and New York Federal Reserve are also among the observers.