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<ul> 
 <li aria-level="1">BIS considers closing mBridge pilot for cross-border payments, citing potential misuse for sanction evasion by BRICS.</li> 
 <li aria-level="1">mBridge facilitates immediate settlement between banks using CBDCs, reducing reliance on U.S. dollar and correspondent banking.</li> 
</ul> 
The Bank for International Settlements (BIS) is at a crossroads with its pilot platform for cross-border payments, known as mBridge. This platform, introduced in 2021, aims to revolutionize how money is transferred worldwide, bypassing traditional U.S. banking systems. However, recent geopolitical developments and regulatory concerns have brought its future into question. 
mBridge’s development, led by China along with the United Arab Emirates, Hong Kong, Saudi Arabia, and Thailand, seeks to facilitate immediate settlement between banks using digital central bank currencies (CBDCs), eliminating the need for third-party scrutiny such as SWIFT.&nbsp; 
This reached a significant milestone, attaining the <a href="https://www.bnnbloomberg.ca/business/international/2024/10/28/bis-debates-ending-project-eyed-by-putin-to-undermine-dollar/">“minimum viable product”</a> stage, indicating readiness for implementation. In January, a landmark transaction saw the UAE central bank sending a digital payment of 50 million dirhams ($13.6 million) to China, showcasing the system’s operational capabilities. 
The project’s advancement comes amidst discussions at recent International Monetary Fund (IMF) and World Bank meetings in Washington, where the inclusion of mBridge in the BRICS countries’ new payment systems was debated. 
These systems aim at de-dollarization, shifting global trade reliance away from the U.S. dollar.&nbsp; 
The potential use of mBridge by the BRICS nations (Brazil, Russia, India, China, and South Africa) to circumvent sanctions and undermine the dollar’s dominance raises significant concerns among Western financial institutions. 
The controversy intensified after Russian President Vladimir Putin proposed the <a href="https://www.ethnews.com/over-30-countries-seek-brics-membership-putins-announcement-shifts-global-power/">BRICS Bridge</a>, based on mBridge’s technology, as a tool to evade sanctions. This proposal has prompted the BIS to reconsider its involvement.&nbsp; 
Agustín Carstens, General Manager of the BIS, emphasized the institution’s inability to engage with sanctioned countries, stating: 
<blockquote>
 “We cannot operate with countries that are under sanctions; I want to be very clear on that.”
</blockquote> 
This stance reflects growing apprehensions about the <a href="https://www.ethnews.com/is-brics-pay-the-end-of-u-s-dollar-dominance-brics-pay-unveiled-with-free-money/">geopolitical implications</a> of such financial technologies. While mBridge offers a promising alternative to conventional correspondent banking, its potential misuse for evading sanctions puts its future at risk.&nbsp; 
The technology underpinning mBridge, provided by China, has become a point of contention, with Western policymakers viewing it as a strategic oversight that could disadvantage them. 
Moreover, the possibility of the BIS shutting down mBridge does not prevent the participating central banks from continuing to use the technology independently.&nbsp; 
Despite technical feasibility, Putin’s plan to challenge the dollar through the BRICS Bridge faces hurdles, not least from other <a href="https://www.ethnews.com/russia-and-bitriver-to-expand-bitcoin-mining-across-brics-nations-key-details-revealed/">BRICS members like India</a>, who are wary of undermining the dollar’s global status. 
As the situation unfolds, the world watches closely how this blend of technology and geopolitics will influence the future of international finance, where digital innovation meets regulatory and political challenges. 
The post <a href="https://www.ethnews.com/brics-and-the-mbridge-project-implications-for-the-u-s-dollar-in-international-trade/">BRICS and the mBridge Project: Implications for the U.S. Dollar in International Trade</a> appeared first on <a href="https://www.ethnews.com">ETHNews</a>.

BRICS and the mBridge Project: Implications for the U.S. Dollar in International Trade

ETHNews

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