BiS Blows Up Brics mBridge

Yesterday Bloomberg reported from a meeting the BiS had on Saturday. Here is our coverage of that news.

Summary:

Authored by GoldFix, ZH Edit

The BIS is considering shutting down its mBridge cross-border payments platform after Russia's President Vladimir Putin spotlighted its potential to evade U.S.-driven sanctions and disrupt dollar dominance, especially as he proposes a BRICS-exclusive “BRICS Bridge” system.

Developed initially by central banks in China, Thailand, Hong Kong, and the UAE, mBridge recently reached a testing phase but faces scrutiny due to China’s role and Western concerns over sanction circumvention. While some BRICS members are cautious, the project reflects rising interest in alternatives to dollar-reliant systems, though internal divisions may impact the pace and reach of these initiatives.

This all comes after 3 significant events hit the news over the last 6 months:

1. June: mBridge went live and the UAE did a successful significant transaction using its own currency
2. September: Agora, the west’s answer ot mBridge, was announced with the west’s major central banks and many commercial banks joining it immediately.
3. October: The BRICS 2024 Summit concluded declaring the cooperative’s mission to dedollarize in manifesto form and successfully marketing a new BRICS-Pay concept

Agora, The BiS Created G7 Answer to mBridge...

On Sept 16  Forty of the world's leading commercial banks have joined a G7-led pilot scheme with the New York Fed and leading central banks from Europe, Korea and Japan for a new digital currency platform designed to speed up and enhance cross border payments.

BIS Weighs Shutting Down mBridge as Putin Advocates for BRICS Bridge

**We will give analysis later today, early tomorrow. This is very significant. For now here is the full story**

The Bank for International Settlements (BIS) is evaluating whether to close its mBridge pilot—a cross-border payments platform Putin has highlighted as a potential workaround for sanctions and a means to challenge the dollar’s global role. Putin’s advocacy for a similar project at last week’s BRICS summit in Kazan underscores the potential geopolitical shift.

Agustin Carstens, BIS’s general manager, emphasized this weekend at a Group of 30 event that the BIS won’t back projects directly linked to sanctioned countries. “We cannot operate with countries subject to sanctions,” Carstens stated firmly.

As the U.S. leans on the dollar’s dominance to enforce global sanctions—particularly after Russia’s Ukraine invasion—alternative systems are gaining appeal. mBridge, initially developed by the central banks of China, Thailand, Hong Kong, and the UAE, reached a functional testing stage this year. Earlier in 2023, UAE’s central bank facilitated a significant digital dirham payment through mBridge, underscoring its real-world potential. However, Western officials are wary, especially given China’s heavy involvement in mBridge’s tech backbone.

At the Kazan BRICS summit, Putin proposed a “BRICS Bridge” platform that would mirror mBridge’s capabilities, empowering BRICS economies to bypass the U.S.-centric financial network. This push has Western officials reassessing mBridge’s future but also questioning if closing BIS support would halt the initiative; participating nations might still proceed independently, say insiders.

For BRICS members like China and Russia, such infrastructure could support sensitive transactions shielded from Western scrutiny. However, nations like India, South Africa, and the UAE, not under U.S. sanctions, remain cautious about diverging too radically from the dollar-driven system. The recent BRICS communique did not mention BRICS Bridge but instead reiterated a call to reform the IMF and World Bank, flagging concerns over “illegal” sanctions.

Despite potential technical viability, BRICS Bridge faces internal hurdles, reflecting the broader challenge for BRICS to create financial tools that truly shift the global balance..