The rise in digital currencies and crypto has caused many countries to start thinking about CBDCs and how they could be best used. This does not happen overnight and must go through various stages of testing before rolling out nationally. Project Inthanon-LionRock, organised by the Hong Kong Monetary Authority (HKMA) and the Bank of Thailand (BOT) looked to design and iterate a new efficient cross-border payment infrastructure that improves on key pain points, including high cost, low speed, and operational complexities. However, the project has now evolved into mBridge following the addition of various banking institutes.
With the signing by the Hong Kong Monetary Authority (HKMA) and the Bank of Thailand (BOT) of a joint
memorandum of understanding (MOU) in May 2019, Project Inthanon-LionRock embarked on the first
common platform for multiple CBDC settlement, corresponding to a BIS Model 3 arrangement based on
a single multi-currency system. Phase 2 began with the BOT and HKMA agreeing to proceed further with joint applied technology research and cross-border fund transfer trials, in collaboration with participating banks and other relevant parties. With the joining of the BIS Innovation Hub (BISIH) Hong Kong Centre, the Digital Currency Institute (DCI) of the People’s Bank of China (PBC) and the Central Bank of the United Arab Emirates (CBUAE) in February 2021, the project evolved into Phase 3 and to this effect was renamed as the mCBDC Bridge project or, in short, mBridge.
Upon completion of Phase 1, the BOT and HKMA agreed to proceed further with joint applied technology
research and cross-border fund transfer trials, in collaboration with participating banks and other relevant
parties. The goals were to enhance the Phase 1 prototype to support CBDCs from other jurisdictions, to
continue investigating different design trade-offs, and to explore business use cases and connections to
other platforms. This took the shape of Project Inthanon-LionRock Phase 2, the findings of which are
summarised in the report.
The Project Inthanon-LionRock Phase 2 prototype (also referred to as the IL2 prototype) is built by ConsenSys on Hyperledger Besu. The prototype encompassed Thailand, Hong Kong and two additional
jurisdictions. Participating central banks were able to control the flow of their CBDC on the prototype,
monitor transactions and balances of their issued CBDC, utilise programmable levels of transaction
privacy, and automate certain compliance functions.
The overall goal of the project throughout the three phases is to design and iterate a new efficient cross-border payment infrastructure that improves on key pain points, including high cost, low speed, and operational complexities.
The report looks at both the successes of Phases 1 and 2 to date and the roadmap for Phase 3 and beyond, looking at:
- An overview of the project: including its background, vision and goals, whilst also looking at the scalability of the project and how it would be regulated.
- Inthanon-LionRock Phase 2: looking at the speed and cost of operating the model, whilst also looking at operational considerations including deployment, security and disaster recovery.
- mBridge: The evolution that took place and how Phase 3 is divided into different subcategories: the Steering committee, the Technology sub-committee, the Legal sub-committee, the Policy sub-committee, and the Business sub-committee.
BISIH wrote in the report, “There is still more work to be done developing the prototype into a production-ready solution. Within the mBridge governance structure, the subcommittees have already begun this work and will continue to build and evolve their efforts guided by the Steering Committee, chaired by the BIS. Legal, policy, governance, and business concerns are being catalogued, analysed, and prioritised for future research and development with a focus on driving to live and production usage.
“We look forward to continuing to contribute to the international dimension of this work, including by
welcoming more central banks to our agile and experimentation driven journey founded on the principles
of do no harm, compliance and interoperability. As milestones are achieved, further progress reports will