The Bank for International Settlements (BIS) announced its
decision to exit the mBridge cross-border payments project, a CBDC initiative
in which China has been a key technology contributor.
China recently proposed open-sourcing the software, and the
Bank of China (Hong Kong) integrated mBridge to enable automated corporate
payments. BIS’s exit from mBridge aligns with rising geopolitical tensions and discussion
at the BRICS Summit on alternative payment systems.
BIS Exits mBridge Project
Agustín Carstens, BIS General Manager, disclosed the
decision at the Santander International Banking Conference, clarifying that the
move reflects project progress rather than political issues or setbacks. After
overseeing mBridge for four years, BIS believes that participating central
banks can continue developing the project independently.
“I would say that the project has been so successful that we
can declare that we have graduated out,” Carstens said. He added the bank was
leaving “not because it was a failure and not because of political
considerations” but rather because “it is at a level where the partners can
carry it on by themselves”.
‘Sanctioned’ BRICS: West Shut Down mBRIDGE But Failed to Stop the Global South
🔷 Watch the full interview: https://t.co/buobW9jZbx
The BIS top executive, Augusten Carstens, announced that “the central bank for all central banks” can no longer work with sanctioned countries.… pic.twitter.com/qDePIg4sKc— Lena Petrova (@LenaPetrovaOnX) November 6, 2024
mBridge, a blockchain platform, was designed to speed up and
increase transparency in cross-border payments using wholesale CBDCs (wCBDCs).
Launched in 2021, it includes central banks from China, Hong Kong, Thailand,
the United Arab Emirates, and more recently, Saudi Arabia, aiming to meet G20
goals for enhanced payment systems.
The platform reached its Minimum Viable Product stage
in June 2023, though further development is required before it can be fully
operational.
Meanwhile, a
report published by the BIS examines the potential impact of money tokenisation
on central banks, as reported by Finance
Magnates. Prepared for the G20, the report highlights the benefits, such as
lower costs and faster transactions, while stressing the need to address
associated risks in the regulated payments sector.
Geopolitical Tensions Impact mBridge
BIS’s departure from mBridge comes amid rising geopolitical
tensions around global payment systems. At the recent BRICS summit, the
proposal for a BRICS Bridge payment platform hinted at an alternative to the
current financial system dominated by the US dollar.
The platform’s discussion raised concerns due to the
involvement of countries like Russia and Iran, both under international
sanctions. During the summit in Kazan, Russia, President
Vladimir Putin criticized the US for using the dollar “as a weapon” against
BRICS members. China and the UAE, both involved in mBridge, attended this
summit alongside Iran, the host nation.
Carstens distanced mBridge from the BRICS Bridge proposal,
stating, “mBridge is not the BRICS Bridge.” He emphasized BIS’s strict policy
of non-collaboration with sanctioned entities.
China’s Influence on mBridge
Despite this clarification, analysts question whether
China’s influence over mBridge may increase as BIS steps back. Some suggest
this could bring mBridge closer to China’s other cross-border financial
efforts, such as the Cross-Border Interbank Payment System.
This shift
could potentially reduce the oversight role of Western central banks, including
the US Federal Reserve and the Bank of England, which previously served as
observers.
Josh Lipsky from the Atlantic Council remarked that BIS’s
withdrawal might signal a division in CBDC development, with payment networks
increasingly reflecting geopolitical divides. He suggested Western central
banks might focus on alternative platforms, such as Project Agorá, supported by
central banks in Europe, Japan, Korea, and the US.
The BIS Steering Committee recognized BIS’s contribution,
while the participating central banks continue advancing mBridge toward full
production. The project marks a key step in digital currency development and
may influence the future of cross-border payments and global finance.
The Bank for International Settlements (BIS) announced its
decision to exit the mBridge cross-border payments project, a CBDC initiative
in which China has been a key technology contributor.
China recently proposed open-sourcing the software, and the
Bank of China (Hong Kong) integrated mBridge to enable automated corporate
payments. BIS’s exit from mBridge aligns with rising geopolitical tensions and discussion
at the BRICS Summit on alternative payment systems.
BIS Exits mBridge Project
Agustín Carstens, BIS General Manager, disclosed the
decision at the Santander International Banking Conference, clarifying that the
move reflects project progress rather than political issues or setbacks. After
overseeing mBridge for four years, BIS believes that participating central
banks can continue developing the project independently.
“I would say that the project has been so successful that we
can declare that we have graduated out,” Carstens said. He added the bank was
leaving “not because it was a failure and not because of political
considerations” but rather because “it is at a level where the partners can
carry it on by themselves”.
‘Sanctioned’ BRICS: West Shut Down mBRIDGE But Failed to Stop the Global South
🔷 Watch the full interview: https://t.co/buobW9jZbx
The BIS top executive, Augusten Carstens, announced that “the central bank for all central banks” can no longer work with sanctioned countries.… pic.twitter.com/qDePIg4sKc— Lena Petrova (@LenaPetrovaOnX) November 6, 2024
mBridge, a blockchain platform, was designed to speed up and
increase transparency in cross-border payments using wholesale CBDCs (wCBDCs).
Launched in 2021, it includes central banks from China, Hong Kong, Thailand,
the United Arab Emirates, and more recently, Saudi Arabia, aiming to meet G20
goals for enhanced payment systems.
The platform reached its Minimum Viable Product stage
in June 2023, though further development is required before it can be fully
operational.
Meanwhile, a
report published by the BIS examines the potential impact of money tokenisation
on central banks, as reported by Finance
Magnates. Prepared for the G20, the report highlights the benefits, such as
lower costs and faster transactions, while stressing the need to address
associated risks in the regulated payments sector.
Geopolitical Tensions Impact mBridge
BIS’s departure from mBridge comes amid rising geopolitical
tensions around global payment systems. At the recent BRICS summit, the
proposal for a BRICS Bridge payment platform hinted at an alternative to the
current financial system dominated by the US dollar.
The platform’s discussion raised concerns due to the
involvement of countries like Russia and Iran, both under international
sanctions. During the summit in Kazan, Russia, President
Vladimir Putin criticized the US for using the dollar “as a weapon” against
BRICS members. China and the UAE, both involved in mBridge, attended this
summit alongside Iran, the host nation.
Carstens distanced mBridge from the BRICS Bridge proposal,
stating, “mBridge is not the BRICS Bridge.” He emphasized BIS’s strict policy
of non-collaboration with sanctioned entities.
China’s Influence on mBridge
Despite this clarification, analysts question whether
China’s influence over mBridge may increase as BIS steps back. Some suggest
this could bring mBridge closer to China’s other cross-border financial
efforts, such as the Cross-Border Interbank Payment System.
This shift
could potentially reduce the oversight role of Western central banks, including
the US Federal Reserve and the Bank of England, which previously served as
observers.
Josh Lipsky from the Atlantic Council remarked that BIS’s
withdrawal might signal a division in CBDC development, with payment networks
increasingly reflecting geopolitical divides. He suggested Western central
banks might focus on alternative platforms, such as Project Agorá, supported by
central banks in Europe, Japan, Korea, and the US.
The BIS Steering Committee recognized BIS’s contribution,
while the participating central banks continue advancing mBridge toward full
production. The project marks a key step in digital currency development and
may influence the future of cross-border payments and global finance.
This post is originally published on FINANCEMAGNATES.
