The Bank for International Settlements (BIS) is considering what to do with Mbridge, one of its high-level digitized settlement projects involving central bank digital currencies (CBDCs). The system, designed to allow international settlements away from the standard financial system, might be terminated due to its possible usage by BRICS countries to sidestep current sanctions, given the involvement of the People’s Bank of China (PBOC).
Reports from people with knowledge of the Washington meetings between the World Bank and the International Monetary Fund (IMF) indicate that the BIS might take the resolution of terminating the project. The decision might be influenced by the recent embrace of cryptocurrency in the BRICS bloc, with several high-level authorities acknowledging the relevance of digital assets in building an alternative payment system.
Mbridge has the participation of the UAE, China, Hong Kong, Thailand, Saudi Arabia, and the BIS Innovation Hub. However, the digital yuan integration might open the doors for Russia to benefit, given its large trade turnover with China, one of its key associates.
On October 26, BIS General Manager Agustin Carstens hinted at the problems Mbridge might bring the organization. “We cannot directly support any project for the BRICS because we cannot operate with countries that are subject to sanctions — I want to be very clear about that,” he stressed.
If taken, the determination to shut down the project might not affect its progress, as Mbridge has already reached the minimum viable product (MVP) stages. This means that the basic functionality is already there. In February, the UAE conducted one of the first settlements using Mbridge and its digital dirham CBDC, sending 50 million digital dirhams ($13.6 million) directly to China.
Read more: Cross Border CBDC Project Mbridge Enters MVP Stage
Read more: Project Mbridge Reaches Milestone: First Digital Dirham Cross-Border Settlement Goes Through
These concerns are not new. American and European observers communicated similar observations in August 2023 due to the project’s sanctions-circumventing possibilities.
Read more: Mbridge Project Has Observers Worried About Advances of the Digital Yuan
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