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The Bank for International Settlements (BIS) has “graduated out” of Project mBridge, the wholesale central bank digital currencies (CBDCs) bridge its Innovation Hub has helped develop since 2021. Nonetheless, the project is many years away from becoming operational, BIS general manager Augustín Carstens said on Oct. 31.
Project mBridge, which uses technology developed by the Hyperledger Foundation, <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/private-firms-join-global-mbridge-cbdc-mvp" rel="" target="_self" text="null" title="https://cointelegraph.com/news/private-firms-join-global-mbridge-cbdc-mvp">reached the status</a> of minimum viable product and invited private sector participation in June. Banks in China and the United Arab Emirates have heeded the call to join.
Besides the BIS, founding members of the project include the central monetary authorities of China, Hong Kong, Thailand and the UAE. Saudi Arabia joined as a full member in June, and the project has over 25 observing members.
<h2 id="bis-insists-it-backs-sanctions">BIS insists it backs sanctions</h2>
The reason for Carstens’ eagerness to distance his organization from such a promising project and downplay its significance was obvious at the fireside chat at the Santander International Banking Conference where Carstens was speaking. He was asked:
<blockquote>
 “I have noted media speculation recently that one of your projects — Project mBridge — could provide the basis for a BRICS initiative to circumvent sanctions. Is that plausible?”&nbsp;
</blockquote>
“With respect to political aspects, the noise out there, mBridge is not the ‘BRICS bridge’ — I have to say that categorically,” Carstens answered. 
Rather, mBridge was designed to meet the needs of central banks. But Carstens did not say circumventing sanctions with Project mBridge was implausible. Instead:
<blockquote>
 “The BIS does not operate with any countries, nor can its products be used by any countries that are subject to sanctions […] And all central bank members are in this mindset.”
</blockquote>
BRICS — the intergovernmental organization named for founding members Brazil, Russia, India, China and South Africa — <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/brics-nations-discuss-creation-of-new-crypto-for-unified-payment-system" rel="" target="_self" text="null" title="https://cointelegraph.com/news/brics-nations-discuss-creation-of-new-crypto-for-unified-payment-system">has been discussing de-dollarization</a> for years. In that time, Iran, Egypt, Ethiopia, Saudi Arabia and the UAE have joined it, meaning that BRICS and Project mBridge share nearly half their members.
<figure>
 <img alt="BIS distances from Project mBridge amid BRICS sanctions concerns" src="https://s3.cointelegraph.com/uploads/2024-10/0192e395-1180-7fa6-8e69-23391295a29a" title="">
 <figcaption style="text-align: center;">
 The traditional international transfer process vs. Project mBridge. Source: BIS
 </figcaption>
</figure>
BRICS has long promoted efforts toward de-dollarization of the international financial system. While it <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/gold-backed-brics-currency-very-hard-to-deliver-lyn-alden" rel="" target="_self" text="null" title="https://cointelegraph.com/news/gold-backed-brics-currency-very-hard-to-deliver-lyn-alden">has had little success</a> so far in reaching that goal, the emphasis on alternative currency options <a data-ct-non-breakable="null" href="https://www.bloomberg.com/news/newsletters/2024-10-26/bloomberg-new-economy-why-brics-de-dollarization-dream-remains-a-fantasy" rel="nofollow noopener" target="_blank" text="null" title="https://www.bloomberg.com/news/newsletters/2024-10-26/bloomberg-new-economy-why-brics-de-dollarization-dream-remains-a-fantasy">shown</a> at the group’s summit in Kazan, Russia, earlier in October made international observers shudder.
<h2 id="reconsidering-international-transfers">Reconsidering international transfers</h2>
The appeal of Project mBridge for potential sanctions evaders is its circumvention of the correspondent banking system, which <a data-ct-non-breakable="null" href="https://cointelegraph.com/magazine/digital-yuan-adoption-payments-regulation/" rel="" target="_self" text="null" title="https://cointelegraph.com/magazine/digital-yuan-adoption-payments-regulation/">is the practical mechanism</a> for imposing sanctions.
Carstens was eager to direct attention to another BIS undertaking — Project Agora — that could provide a basis for the “Finternet” concept of international financial architecture <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/bis-envisions-world-finternet-unified-ledger-technology" rel="" target="_self" text="null" title="https://cointelegraph.com/news/bis-envisions-world-finternet-unified-ledger-technology">he introduced in April</a>.
<figure>
 <img alt="BIS distances from Project mBridge amid BRICS sanctions concerns" src="https://s3.cointelegraph.com/uploads/2024-10/0192e395-6bb4-7afb-8933-1ff459f3fca9" title="">
 <figcaption style="text-align: center;">
 Flow of transfers under Project Agora. Source: BIS
 </figcaption>
</figure>
The Bank of France (representing the Eurosystem), Bank of Japan, Bank of Korea, Bank of Mexico, Swiss National Bank, Bank of England and the Federal Reserve Bank of New York are the participants in Project Agora — no BRICS members. Crucially, Project Agora maintains the correspondent banking system.
<figure>
 <img alt="BIS distances from Project mBridge amid BRICS sanctions concerns" src="https://s3.cointelegraph.com/uploads/2024-10/0192e395-a51b-7fc7-a60d-f82073beaf48" title="">
 <figcaption style="text-align: center;">
 Source: <a data-ct-non-breakable="null" href="https://x.com/ananpoe/status/1852014231614325097" rel="nofollow noopener" target="_blank" text="null" title="https://x.com/ananpoe/status/1852014231614325097">Ananya Kumar</a>
 </figcaption>
</figure>
Magazine: <a data-ct-non-breakable="null" href="https://cointelegraph.com/magazine/digital-yuan-adoption-payments-regulation/" rel="" target="_self" text="null" title="https://cointelegraph.com/magazine/digital-yuan-adoption-payments-regulation/">How the digital yuan could change the world… for better or worse</a>
&nbsp;

BIS distances from Project mBridge amid BRICS sanctions concerns

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