Last week, the Bank for International Settlements (BIS) announced its exit from the mBridge cross-border payments project, a significant initiative in the field of central bank digital currencies (CBDCs). Agustín Carstens, BIS General Manager, confirmed the decision at the Santander International Banking Conference, attributing the move to the project’s progress rather than political pressures or project failures. Having overseen mBridge for four years, BIS now feels confident that the participating central banks can independently carry the project forward.
mBridge, a blockchain-based platform, was developed to facilitate faster and more transparent cross-border payments using wholesale CBDCs (wCBDCs). Launched in 2021, mBridge brings together central banks from China, Hong Kong, Thailand, the United Arab Emirates, and more recently, Saudi Arabia, with the aim of achieving the G20’s objectives for enhanced cross-border payment systems. The platform’s Minimum Viable Product (MVP) stage was reached in June this year, but Mr Carstens indicated that further development is necessary before it becomes operational.
China has been instrumental in advancing the project’s technology, even announcing plans to open-source the software. Recently, the Bank of China (Hong Kong) integrated with mBridge to enable automated payments for its corporate clients, marking a notable milestone.
BIS’s departure from mBridge comes amid heightened geopolitical sensitivities surrounding global payment systems. At the recent BRICS summit, discussions about a BRICS Bridge payment platform suggested a potential alternative financial infrastructure independent of US dollar dominance. This BRICS initiative raised concerns in some quarters, especially given the involvement of countries like Russia and Iran, which are under international sanctions. Mr Carstens was quick to dismiss any association between mBridge and the BRICS Bridge project, emphatically stating, “mBridge is not the BRICS Bridge.” He underscored that BIS has a strict policy of non-collaboration with sanctioned entities.
Despite this clarification, questions remain regarding the influence that China may wield over mBridge going forward. With the BIS stepping back, analysts suggest that China’s role could expand, potentially aligning mBridge with China’s other cross-border financial initiatives, such as the Cross-Border Interbank Payment System (CIPS). This shift may result in reduced oversight by Western central banks, including the US Federal Reserve and Bank of England, which previously held observer status.
Josh Lipsky of the Atlantic Council noted that BIS’s decision could mark a shift in CBDC project dynamics, where payment networks increasingly reflect geopolitical divides. He highlighted that while China could continue developing mBridge, Western central banks may turn their attention to alternative platforms such as Project Agorá, a similar initiative backed by central banks in Europe, Japan, Korea, and the US.
The BIS Steering Committee expressed gratitude for BIS’s contributions, with the central banks now focused on advancing mBridge towards full production. The project remains a landmark in the digital currency landscape, with significant implications for the future of cross-border payments and the global financial architecture.
