Fintech Market Trends, Fintech Software, Payment Gateway Development, Tech & Architecture

UAE–China CBDC Breakthrough: Is This the Future of Fintech, Banking, and FX Settlement?

November 28, 2025 No comments yet

In late 2025, the UAE and China successfully completed CBDC-based cross-border transactions using mBridge, a multi-CBDC platform jointly built by the BIS Innovation Hub, the People’s Bank of China (PBOC), the Central Bank of the UAE (CBUAE), the Hong Kong Monetary Authority (HKMA), and the Bank of Thailand.

CBDCs can technically settle cross-border value in near real time, without SWIFT, correspondent banks, or pre-funded nostro accounts.

If SWIFT and correspondent banking defined the last 50 years of global payments, mBridge hints at what the next generation of wholesale settlement rails may look like. This piece unpacks what this could mean for fintechs, PSPs, banks and infrastructure builders—without assuming CBDCs are already ready for production today.

What Has Been Tested So Far?

The UAE–China tests demonstrate that mBridge can support:​

  • Cross‑border transfers using multiple CBDCs issued by participating central banks
  • Near real‑time settlement between institutions on a shared DLT platform
  • Payment‑versus‑payment (PvP) FX between CBDCs, reducing settlement risk
  • 24/7 availability, independent of traditional cut‑off times

Importantly, these are still pilot‑phase experiments with limited participants and volumes. They are supervised tightly by central banks and regulators and are not yet a replacement for SWIFT or existing cross‑border rails.​
However, for a sophisticated market participant, this is enough to start thinking about feasibility, architecture, and opportunity.

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What Could Change in the Cross‑Border Stack?

Today’s cross‑border payments typically involve:

  • Several correspondent banks in a chain
  • SWIFT messages for instructions
  • Nostro/vostro accounts funded in advance
  • Cut‑off times, time‑zone frictions, and manual reconciliation

A mature multi‑CBDC platform could, in theory, offer:

  • T≈0 settlement in central bank money between participants
  • Direct transfers on a shared ledger, rather than hops across multiple ledgers
  • Built‑in FX and PvP mechanisms between CBDCs
  • More structured, traceable transaction data for compliance and analytics​

For banks and PSPs, that suggests a future where CBDC is another high‑value rail to consider for specific corridors—especially those with strong trade ties such as UAE–China—rather than sending everything through the same correspondent routes.

Possible Impact on Banks (If CBDC Rails Scale)

If pilots like mBridge evolve into production‑grade networks over the next 5–10 years, banks could see:

  • Less reliance on long correspondent chains in certain corridors, especially where both central banks participate.
  • New roles as CBDC liquidity providers, FX market‑makers, and compliance nodes on multi‑CBDC networks, instead of just message forwarders.​
  • Pressure on some forms of cross‑border fee income, but opportunities to earn from CBDC FX, liquidity and data‑driven services.

For now, the realistic stance is “monitor and experiment”: join sandboxes, evaluate integration options with mBridge‑connected banks, and start assessing how treasury, liquidity and compliance tooling would need to evolve.

Possible Impact on Fintechs and PSPs

For fintechs and PSPs, CBDC pilots mainly signal future optionality, not immediate displacement of existing rails:

1. New Product Possibilities (Medium Term)

If CBDC corridors become commercially accessible via partner banks, fintechs might eventually offer:

  • Near real‑time cross‑border merchant settlement for trade flows
  • Higher‑value B2B payments with lower FX and processing overhead
  • Programmable escrow and trade‑finance flows tied to events (documents, IoT, milestones)

In the near term, these are design and roadmap questions rather than features for tomorrow’s sprint, but early thinking gives a competitive advantage once corridors open up.

2. Technical Readiness

To take advantage when access becomes real, PSPs and fintechs will need:

  • Multi‑rail routing engines that can treat CBDC as another rail alongside cards, RTP, UPI/PIX, wallets, etc.
  • Ledgers and settlement systems capable of handling different asset types (fiat, e‑money, CBDC, potentially tokenised deposits).
  • Compliance tooling ready for richer, more structured CBDC transaction data and near real‑time monitoring.​

Right now, being CBDC‑ready is mostly about having modular, API‑first, rail‑agnostic infrastructure, not about coding directly to mBridge.

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What It Could Mean for Payment Gateways and Aggregators?

Gateways and aggregators—especially those serving trade, FX, and high‑value B2B—will eventually be asked:

“Can your platform route via CBDC when it’s cheaper, faster, or required?”

Even while CBDC is still in pilot:

  • Architects should assume future CBDC connectors (direct or via banks) and design routing engines with that in mind.
  • Settlement mechanisms should be reviewed to support T=0 or near T=0 cycles, atomic PvP flows, and richer reconciliation sources.
  • API contracts and ledgers should be able to represent CBDC balances and flows without a full re‑platform.

Platforms built today purely around batch card settlement and SWIFT files will find that adaptation harder later than those starting with event‑driven, multi‑asset designs.

Where PrimeFin Labs Can Help on CBDC Readiness?

PrimeFin Labs can  help fintechs, PSPs and banks get their own infrastructure CBDC‑ready through modular, source‑owned software:

CBDC‑Ready Wallet & End‑User Layers

PrimeFin Labs can design and implement digital wallet layers that are naturally compatible with a future CBDC world:

  • Secure wallet storage for regulated digital balances (CBDC, e‑money, or tokenised balances)
  • Biometric authentication and strong identity bindings
  • Multi‑platform access (mobile, web, desktop) and offline capabilities where required (for offline CBDC pilots)
  • Instant P2P transfers, merchant payments, QR payments and bill‑payment integration over existing rails, with CBDC as an additional future option

These capabilities mirror the end‑user services being discussed in CBDC pilots (retail wallets, QR payments, everyday merchant use).

PrimeFin Labs can also delivers:

  • Payment gateways and aggregators that already support multi‑rail routing (cards, A2A, wallets, BNPL) and can be extended to call CBDC‑connected APIs when banks expose them.
  • Payout, reconciliation, and settlement engines built on event‑driven ledgers that can handle near real‑time and T+0 flows, plus multi‑currency and multi‑asset accounting.
  • Integration layers that connect to banks, FX providers, or future CBDC access points via APIs, ISO 20022, or custom connectors, so clients do not have to rebuild their stack when new rails arrive.

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