The Bank for International Settlements (BIS) announced its decision to exit the mBridge cross-border payments project, a CBDC initiative in which China has been a key technology contributor.

China recently proposed open-sourcing the software, and the Bank of China (Hong Kong) integrated mBridge to enable automated corporate payments. BIS's exit from mBridge aligns with rising geopolitical tensions and discussion at the BRICS Summit on alternative payment systems.

BIS Exits mBridge Project

Agustín Carstens, BIS General Manager, disclosed the decision at the Santander International Banking Conference, clarifying that the move reflects project progress rather than political issues or setbacks. After overseeing mBridge for four years, BIS believes that participating central banks can continue developing the project independently.

“I would say that the project has been so successful that we can declare that we have graduated out,” Carstens said. He added the bank was leaving “not because it was a failure and not because of political considerations” but rather because “it is at a level where the partners can carry it on by themselves”.

'Sanctioned' BRICS: West Shut Down mBRIDGE But Failed to Stop the Global South

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The BIS top executive, Augusten Carstens, announced that “the central bank for all central banks” can no longer work with sanctioned countries.… pic.twitter.com/qDePIg4sKc

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mBridge, a blockchain platform, was designed to speed up and increase transparency in cross-border payments Cross-Border Payments Cross-border payments refer to transactions involving individuals, companies, banks or settlement institutions operating in at least two different countries.The concept of cross-border payment is not new however, despite its rise in importance in the 21st century.New technology and the growth of blockchain has brought the term cross-border payment into our daily conversations.Cross-border payments are an essential term that refers to any transaction involving private individuals’ companies, bank Cross-border payments refer to transactions involving individuals, companies, banks or settlement institutions operating in at least two different countries.The concept of cross-border payment is not new however, despite its rise in importance in the 21st century.New technology and the growth of blockchain has brought the term cross-border payment into our daily conversations.Cross-border payments are an essential term that refers to any transaction involving private individuals’ companies, bank Read this Term using wholesale CBDCs (wCBDCs). Launched in 2021, it includes central banks from China, Hong Kong, Thailand, the United Arab Emirates, and more recently, Saudi Arabia, aiming to meet G20 goals for enhanced payment systems.

The platform reached its Minimum Viable Product stage in June 2023, though further development is required before it can be fully operational.

Meanwhile, a report published by the BIS examines the potential impact of money tokenisation on central banks, as reported by Finance Magnates. Prepared for the G20, the report highlights the benefits, such as lower costs and faster transactions, while stressing the need to address associated risks in the regulated payments sector.

Geopolitical Tensions Impact mBridge

BIS’s departure from mBridge comes amid rising geopolitical tensions around global payment systems. At the recent BRICS summit, the proposal for a BRICS Bridge payment platform hinted at an alternative to the current financial system dominated by the US dollar.

The platform’s discussion raised concerns due to the involvement of countries like Russia and Iran, both under international sanctions. During the summit in Kazan, Russia, President Vladimir Putin criticized the US for using the dollar “as a weapon” against BRICS members. China and the UAE, both involved in mBridge, attended this summit alongside Iran, the host nation.

Carstens distanced mBridge from the BRICS Bridge proposal, stating, “mBridge is not the BRICS Bridge.” He emphasized BIS’s strict policy of non-collaboration with sanctioned entities.

China’s Influence on mBridge

Despite this clarification, analysts question whether China’s influence over mBridge may increase as BIS steps back. Some suggest this could bring mBridge closer to China’s other cross-border financial efforts, such as the Cross-Border Interbank Payment System.

This shift could potentially reduce the oversight role of Western central banks, including the US Federal Reserve and the Bank of England, which previously served as observers.

Josh Lipsky from the Atlantic Council remarked that BIS’s withdrawal might signal a division in CBDC development, with payment networks increasingly reflecting geopolitical divides. He suggested Western central banks might focus on alternative platforms, such as Project Agorá, supported by central banks in Europe, Japan, Korea, and the US.

The BIS Steering Committee recognized BIS's contribution, while the participating central banks continue advancing mBridge toward full production. The project marks a key step in digital currency development and may influence the future of cross-border payments Payments One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl Read this Term and global finance.