BIS Departure Raises Questions About mBridge’s Geopolitical Role
The Bank for International Settlements (BIS) recently announced its exit from Project mBridge, a cross-border payments initiative involving the central banks of China, Hong Kong, Thailand, the United Arab Emirates, and Saudi Arabia. BIS General Manager Agustin Carstens explained that the four-year project had reached a stage where its members could proceed independently. This decision, however, intensifies scrutiny on mBridge’s role, especially given its alignment with China and potential links to BRICS nations, including Russia.
Fiat CBDCs Without Precious Metal or Commodity Backing
Central bank digital currencies (CBDCs) represent a government-backed shift toward digitized currency. Unlike traditional assets or cryptocurrencies, fiat CBDCs lack backing by precious metals or commodities. Their value relies solely on government regulation, exposing them to political and economic instability. This vulnerability makes them “slippery” assets, prone to rapid devaluation if confidence erodes or inflation spikes.
Why the BIS Left Project mBridge
Carstens confirmed that the BIS exit did not indicate project failure or political tension. After four years of involvement, BIS felt members could manage independently. He acknowledged, however, that mBridge remains far from operational. “Many, many years need to happen,” he said, emphasizing its incomplete development. BIS left partly to avoid speculation about the platform facilitating BRICS nations’ sanctions evasion—a concern Carstens firmly rejected.
Rising Geopolitical Concerns with mBridge
China’s involvement in mBridge has drawn increased Western scrutiny, especially following the recent BRICS summit hosted by Russia. Western governments fear that mBridge could support cross-border transactions for sanctioned countries like Russia. Carstens attempted to dispel these concerns, stating, “mBridge is not the BRICS bridge.” Nonetheless, financial analysts like Lipsky suggest that without BIS oversight, the project may evolve under China’s influence, aligning it with BRICS goals and challenging Western financial norms.
mBridge’s Future and Global Financial Implications
China will likely continue developing mBridge despite BIS’s exit. Without BIS involvement, the Federal Reserve—a BIS member—loses a direct view of the project’s trajectory. Analysts speculate that mBridge could facilitate BRICS and allied transactions, further diverging from Western regulatory standards.
BIS’s departure from mBridge underscores the delicate balance of global economic power and the risks associated with fiat-backed CBDCs. As China moves forward with mBridge, cross-border payments may increasingly reflect a shift toward Eastern financial influence.
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