A cooperative project incorporating central bank digital currencies (CBDCs) for cross-border payments, Project mBridge, has seen the Bank for International Settlements (BIS) announce its exit. Rumors suggest that sanctioned countries could circumvent restrictions using the platform, prompting the BIS Innovation Hub to withdraw from the project.
With support from central banks in China, Thailand, Hong Kong, and the United Arab Emirates, Project mBridge—which aims to simplify CBDC transactions—has advanced to the “minimum viable product” stage. Saudi Arabia became a full member recently. Notwithstanding these developments, BIS General Manager Agustín Carstens explained on October 31 that the BIS is abandoning MBridge for maturational rather than political grounds.
The BIS emphasizes that it does not interact with sanctioned organizations and is adamant about sanctions compliance. BRICS (Brazil, Russia, India, China, and South Africa) is an economic alliance that has long looked for alternatives to the dollar-dominated financial system. During a banking conference, Carstens emphasized that the goal of mBridge was never to cater to this group. Instead, mBridge aims to adhere to the comprehensive and approved standards set by central banks.
The platform’s independence from the conventional correspondent banking network—the primary means of enforcing economic sanctions—could make it appealing. Nations seeking to overcome these limitations have raised concerns about its usage. However, Carstens categorically refuted this conjecture, asserting that the sole purpose of mBridge’s creation was to meet central bank requirements, not to support alternative payment networks.
After leaving Bridge, BIS turns its attention to Project Agora. Agora, in contrast to mBridge, maintains the correspondent banking framework with the goal of establishing a safe digital finance environment that complies with global regulatory requirements. With the exception of any BRICS nations, Project Agora comprises central banks from the US, UK, Japan, and other nations.
Project mBridge will continue to develop under the direction of its founding members even though BIS will no longer be participating. Carstens pointed out that even though mBridge is a potential new method for CBDC transactions, it would still take several years for it to be operational.
