The Bank for International Settlements (BIS) has announced its decision to exit the mBridge cross-border payment project, a blockchain-based CBDC initiative led by China. This project, launched in 2021, aimed to expedite and improve transparency in cross-border payments through wholesale central bank digital currencies (wCBDCs).
BIS Steps Back as mBridge Progresses
Agustín Carstens, General Manager of BIS, revealed the decision at the Santander International Banking Conference, explaining that BIS’s departure signals the project’s successful progress rather than political reasons. Carstens emphasized that BIS is stepping back because the central banks involved, including China, Hong Kong, Thailand, the UAE, and more recently, Saudi Arabia, are well-positioned to continue mBridge’s development independently. “We are leaving not because of political considerations but because the project has reached a level where our partners can advance it further on their own,” Carstens stated.
mBridge’s Development and Geopolitical Context
Since its inception, mBridge has sought to streamline cross-border transactions, contributing to G20 objectives for better international payment systems. The platform achieved a Minimum Viable Product (MVP) stage in mid-2023, although further development is necessary before full-scale operations.
BIS’s withdrawal from mBridge also follows heightened geopolitical discussions at the recent BRICS Summit, where leaders proposed a BRICS Bridge payment system as a potential alternative to current dollar-dominated global payments. This proposal has fueled speculation about new financial platforms that could reduce reliance on the US dollar, especially among BRICS members. President Vladimir Putin, for example, criticized the US dollar’s influence, calling it a tool of financial coercion against certain nations.
BIS’s Stance on Geopolitical Concerns
To clarify, Carstens stressed that “mBridge is not the BRICS Bridge,” underscoring BIS’s commitment to non-collaboration with entities under international sanctions. However, analysts have noted that BIS’s exit could lead to increased Chinese influence over mBridge, aligning it with China’s other cross-border financial projects, such as the Cross-Border Interbank Payment System. This shift may reduce the role of Western central banks, which previously monitored the project.
Emerging Divisions in CBDC Development
Some experts believe BIS’s exit may signal a widening divide in CBDC platforms, reflecting broader geopolitical tensions. Josh Lipsky of the Atlantic Council suggested that as mBridge progresses, Western central banks might pivot to alternative CBDC platforms, such as Project Agorá, which has support from central banks in Europe, Japan, Korea, and the US.
As participating central banks advance mBridge toward full production, BIS’s involvement and contributions are acknowledged as a significant step forward in the development of digital currency systems and cross-border payment innovations, potentially shaping the future landscape of global finance.
