November 4, 2024
By Our Correspondent
The Bank for International Settlements (BIS) has been engaged with the mBridge cross-border central bank digital currency (CBDC) payment system for a duration of four years. Agustín Carstens, the General Manager of the BIS, announced that the project has now been transferred to the central banks of China, Hong Kong, Saudi Arabia, Thailand, and the United Arab Emirates. mBridge leverages blockchain technology to facilitate cross-border payments for commercial banks utilizing wholesale central bank digital currencies (wCBDCs). Its design accommodates payments in local currencies.
The G20 aims to enhance the speed, cost-effectiveness, and transparency of cross-border payments, with mBridge being a viable solution to achieve these objectives. China has taken the lead in the technology working group and has recently revealed intentions to make the blockchain-based software open source. During the recent BRICS summit, discussions regarding a BRICS Bridge payment system were ongoing. Given that China and the UAE are members of BRICS, along with sanctioned nations such as Iran and Russia, the possibility of mBridge intersecting with the BRICS Bridge has placed the BIS in a challenging position.
At the Santander International Banking Conference, Mr. Carstens directly addressed this concern. He stated, “Any projects we develop should not serve as a means to circumvent sanctions. mBridge is distinct from the BRICS Bridge, and I must emphasize that point. mBridge was not established to meet the requirements of BRICS; it was designed to fulfill the broader needs of central banks.” According to Bloomberg, this matter was also a topic of discussion during the recent IMF meetings, where the possibility of the BIS withdrawing from the project was contemplated.
Nonetheless, Mr. Carstens clarified that political factors were not the reason for the BIS’s transition. “I would assert that the project has been so successful that we can confidently say we have graduated from it. The BIS is stepping away from this project, not due to failure or political motivations, but primarily because we have been involved for four years, and it has reached a stage where the partners can independently manage it,” Carstens remarked.
