RAKBANK Completes International CBDC Transaction Using eCNY and Digital Dirham

Central bank digital currencies (CBDCs) have a lot of potential to uproot the cross-border payments market. The latest move by the National Bank of Ras Al Khaimah (RAKBANK) highlights this. RAKBANK has successfully exchanged a remittance using China’s digital Yuan (eCNY) in exchange for the Digital Dirham, the UAE’s CBDC. The cross-border payment was completed using the Central Bank of the UAE’s (CBUAE) mBridge platform and marks a significant step forward in the international payments market. Project mBridge is an initiative aimed at addressing inefficiencies in cross-border payments. This includes high costs, slow processing times, and operational complexities. Launched in 2021, it is a collaborative effort between the 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. Raheel Ahmed, group CEO of RAKBANK commented: “The participation of RAKBANK in the mBridge platform and the execution of our first-ever central bank digital currency international payment highlight RAKBANK’s cutting-edge digital capabilities. This milestone reflects our commitment to rapidly expanding our international payments arm.”

Utilising mBridge

The core of mBridge is a multi-central bank digital currency platform, built on distributed ledger technology. Additionally, this platform allows participating central and commercial banks to conduct real-time, peer-to-peer cross-border payments and foreign exchange transactions. The mBridge Ledger, a new blockchain, underpins the platform, supporting secure and instantaneous transaction Vikas Suri, co-head of wholesale banking group at RAKBANK added: “The successful transfer of eCNY to our correspondent in China is a game-changer in several respects. It’s one of the first UAE-led foreign currency transfers executed in local currencies. Additionally, it did not involve a third currency to China and did not use conventional payment rails. “This is a gamechanger that paves the way for instant blockchain based CBDC exchanges with payment versus payment, fundamentally altering how we approach international payments. Our next steps will focus on supporting the China and UAE business corridor for our clients. We will do so by leveraging mBridge to reduce costs and improve the speed of remittances.”