Steady Growth in Currency Bridge Operations Solving CrossBorder Payment Challenges and Pain Points

Coin World News Report:
The exploration progress of the multilateral central bank digital currency bridge project has attracted widespread attention in the market.
“In the past few months, the business volume of the currency bridge has been steadily increasing, proving the market’s confidence in the platform.” On October 23, Deputy Governor of the People’s Bank of China, Lu Lei, revealed the latest progress of the project after entering the minimum viable product stage.
At the 2024 Financial Street Forum series of events held on the same day, the seminar on “Multilateral Central Bank Digital Currency Bridge: Central Bank Digital Currency Connecting the Global Economy” was held. Lu Lei introduced that the currency bridge project is focusing on solving the difficulties and pain points of cross-border payments, attracting the attention of many participants.
What is a currency bridge? Simply put, it is a bridge built by central banks of multiple countries using central bank digital currencies to form a cross-border payment network. Payment transactions can be conducted in an orderly manner through the “bridge”, achieving faster, lower-cost, and safer cross-border payments and settlements, benefiting all participants.
In February 2021, the multilateral central bank digital currency bridge project was jointly launched by the Innovation Center of the Bank for International Settlements (Hong Kong), the Central Bank of Thailand, the Central Bank of the United Arab Emirates, the Digital Currency Research Institute of the People’s Bank of China, and the Hong Kong Monetary Authority, aiming to explore the application of central bank digital currencies in cross-border payments.
After more than three years of development, the multilateral central bank digital currency bridge project entered the minimum viable product stage in June this year. This means that participating institutions of the currency bridge can conduct real transactions based on actual situations in an orderly manner. At the same time, the project members have also expanded – the Saudi Arabian Monetary Authority has officially joined the currency bridge.
“The demand side is the driving force for the development of the currency bridge project.” Zhu Min, Vice Chairman of the Boao Forum for Asia, said at the seminar that the interconnection and rapid development of Asian economies have promoted the launch and gradual implementation of the multilateral central bank digital currency bridge project.


In Lu Lei’s view, during the implementation of the currency bridge project, all parties have always adhered to the three principles of “no loss”, “compliance”, and “interconnection”.
To achieve the benign evolution of the international monetary system, the most effective method is to achieve interconnection of various cross-border payment systems.
Lu Lei stated that the currency bridge can not only support the interconnection of central bank digital currency systems but also support the connection with traditional central bank payment systems. At the same time, the currency bridge achieves convenient synchronous settlement through central bank currencies, achieving interconnection at the currency level as well.
Currently, the multilateral central bank digital currency bridge project is focusing on exploring solutions to the difficulties and pain points of cross-border payments, and its advantages are gradually emerging –
Due to factors such as complex participants, long business chains, and high identity verification costs, small-scale cross-border payment businesses such as cross-border e-commerce and remittances are often overlooked by commercial banks.
“The currency bridge should pay more attention to these business activities that are more closely related to people’s livelihoods, solve market pain points, and make up for the international monetary and trade system.” Lu Lei said.
In order to solve the problems of low efficiency and high costs in cross-border payments, the currency bridge is actively exploring.
Statistics released by the Bank for International Settlements show that the currency bridge platform can complete a payment transaction in 6 to 9 seconds, while cross-border transactions processed through correspondent banks currently have a delay of 2 to 5 days between payment and settlement. At the same time, using the currency bridge to complete cross-border payment transactions can save nearly half of the costs.
Currently, the currency bridge project has entered a new stage and is also facing new challenges such as data storage and network stability. How to further improve the performance of the currency bridge system?
At the seminar, Mu Changchun, Director of the Digital Currency Research Institute of the People’s Bank of China, introduced three plans –
First, strengthen privacy protection design. It is planned to launch relevant privacy protection technologies in 2025 to prove the compliance of the transaction parties and the adequacy of funds without disclosing details such as account balances and transaction timestamps, ensuring the efficiency of the entire system.
Second, improve the development and operation system of the system. The currency bridge system is deployed in a decentralized manner, and each party operates independently. However, as the currency bridge system is a cross-border financial market infrastructure that operates regularly, an efficient development and operation mechanism is needed to ensure the continuity of the system’s business.
Third, enhance the openness and transparency of the currency bridge platform, and plan to promote joint development and code delivery through the development and operation system. (Reporters Wu Yu and Ren Jun)