China and UAE Sign Agreement
Recently, during the 10th Ministerial Meeting of the China-Arab States Cooperation Forum, UAE President Mohammed bin Zayed Al Nahyan conducted a state visit to China. During the visit, China and the UAE signed multiple agreements and memorandums of understanding, emphasizing their shared recognition of the crucial role of central bank digital currencies (CBDCs) in facilitating cross-border trade and investment. The two central banks signed a memorandum of understanding on enhancing cooperation in CBDCs, aimed at further deepening bilateral and multilateral collaboration. Additionally, China praised the UAE for completing the first direct cross-border payment transaction worth 50 million dirhams using the digital dirham via the "mBridge" platform. This initiative paves the way for easier trade and investment between the two countries.
The mBridge (Multiple CBDC Bridge) is an innovative financial technology platform designed to facilitate direct cross-border payments using CBDCs. By leveraging blockchain and other advanced technologies, the platform enables the interconnection of different countries' central bank digital currency systems and real-time gross settlement systems (RTGS). This technological architecture not only enhances transaction speed and transparency but also significantly reduces the cost and complexity of cross-border payments. Earlier, at the end of January, the mBridge platform successfully executed its first substantial real-time payment operation between the UAE and China, involving a 50 million dirham CBDC cross-border transaction. This marked the first large-scale use of the mBridge platform since its initial pilot in 2022.
This collaboration and the successful transaction have profound implications for both countries. Firstly, it underscores the leading positions of China and the UAE in global financial innovation. Using digital currencies can increase the efficiency and security of cross-border payments, providing more convenience for businesses and consumers in both countries. Furthermore, the success of this cooperative model is likely to attract more countries to join the platform, driving further development and integration of global financial markets. Ultimately, through such innovative financial technologies and cooperative mechanisms, China and the UAE aim to achieve closer and more efficient economic cooperation on a broader bilateral and multilateral scale, thereby promoting economic globalization and regional economic integration.