Originally published on: October 31, 2024
The Bank for International Settlements (BIS) has decided to step back from Project mBridge, a central bank digital currencies (CBDCs) initiative it has been involved in since 2021. According to BIS general manager AugustÃn Carstens, the project still has a long way to go before becoming operational. This move comes amidst growing concerns over sanctions from BRICS nations.
Utilizing technology from the Hyperledger Foundation, Project mBridge achieved the status of a minimum viable product earlier this year and welcomed private sector participation. Banks in China and the UAE have already joined the project alongside central monetary authorities from various countries.
While some may view Project mBridge as a potential tool to evade sanctions, Carstens emphasized during a recent event that it is not intended to serve as a bridge for BRICS nations. The project’s main objective is to address the needs of central banks, steering away from any political implications.
BRICS, consisting of Brazil, Russia, India, China, and South Africa, has long been exploring de-dollarization efforts, with discussions ongoing for years. While progress towards this goal has been slow, the recent summit in Kazan, Russia shed light on alternative currency options that have raised international concerns.
Project mBridge stands out for its ability to bypass the correspondent banking system, presenting an alternative to the current mechanisms for enforcing sanctions. Carstens highlighted another BIS project, Project Agora, which could potentially shape the future of international financial architecture.
Project Agora includes participants from the Eurosystem, Switzerland, the UK, and the US, focusing on maintaining the correspondent banking system. This project could provide a basis for a new concept in international finance introduced by Carstens earlier this year.
As discussions around digital currencies continue to evolve, the implications of initiatives like mBridge and Agora are becoming increasingly significant. Stay updated on the latest developments in the world of crypto and financial regulations by subscribing to our newsletter for valuable insights every Monday. Join us in navigating the complex landscape of crypto laws to make informed decisions for your ventures.
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