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mBridge Under Fire: BIS Weighs Shutting Down Putin’s Eyed De-Dollarization Tool

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Giuseppe Ciccomascolo
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Key Takeaways

  • The BIS is considering shutting down the mBridge project.
  • Russia’s Vladimir Putin is eyeing a project similar to mBridge to de-dollarize BRICS countries.
  • The U.S. is taking notice of mBridge.

The Bank for International Settlements (BIS) is considering shutting down  the mBridge project, which recently made the headlines when Russian President Vladimir Putin suggested using a similar system as a potential tool for de-dollarization.

The project has drawn the ire of Western policymakers, who are wary of its potential to undermine their financial influence.

What is mBridge?

mBridge, developed under the aegis of the BIS Innovation Hub, aims to streamline cross-border payments by establishing direct digital connections between central banks.

The platform is being spearheaded by the central banks of China, Thailand, Hong Kong, and the United Arab Emirates.

Having reached its “minimum viable product” stage, mBridge is almost ready for large-scale testing.

Were it to succeed, mBridge would, by design, bypass the current correspondent banking system, a framework that heavily relies on U.S. dollars.

BRICS’ Key to De-Dollarization

At the recent BRICS summit in Kazan, Russia, President Vladimir Putin championed  implementing a payment system in global de-dollarization efforts.

BRICS (Brazil, Russia, India, China, and South Africa) member countries see the system as a means of reducing their reliance on the U.S.-dominated financial system while minimizing the effects of potential U.S. sanctions.

Many of the powerful factions in Washington perceive mBridge as a potential tool to undermine the dollar’s dominance in international trade.

They contend that the increasing growth and usage of mBridge would enable China and other countries circumvent the U.S.-dominated financial system, lessening the effectiveness of sanctions against countries going against U.S. interests.

However, despite Moscow’s praise, the BIS now finds itself in a delicate position, torn between supporting innovation and navigating the complex geopolitical landscape.

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