Distances from project mBridge BIS among BRICS sanctions concerns

The Bank for International Settlements (BIS) has “graduated” from Project mBridge, a mass central bank digital currencies (CBDC) bridge innovation center that has helped develop from 2021. Manager Augustine Carstens said on October 31.

Project mBridge, which uses technology developed by the Hyperledger Foundation, reached the stage of small-scale production and invited private sector participation in June. Banks in China and the United Arab Emirates have accepted the call to join.

In addition to BIS, the project's founding members include the central monetary authorities of China, Hong Kong, Thailand and the United Arab Emirates. Saudi Arabia joined as a full member in June and the project has more than 25 observer members.

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BIS insists that it supports the sanctions

Why Carstens was eager to distance the company from such a promising project and downplay its value was clear in a fireside discussion at the Santander International Banking Conference where Carstens was speaking. He was asked.

“I have recently noticed media speculation that one of your projects – Project mBridge – could provide the basis for a BRICS initiative to remove sanctions. Is that reasonable?”

“Regarding the political aspects, the noise out there, mBridge is not a ‘BRICs bridge' – I have to say that clearly,” Carstens replied.

Rather, mBridge was designed to meet the needs of central banks. But Carstens did not say that the sanctions imposed on Project mBridge were impossible to avoid. Instead:

“BIS does not work with any countries, and its products cannot be used in embargoed countries […] And all members of the central bank are in this mindset.

BRICS – named for founding members Brazil, Russia, India, China and South Africa – has been discussing the devaluation of the dollar for years. At that time, Iran, Egypt, Ethiopia, Saudi Arabia and the United Arab Emirates joined, meaning that BRICS and Project mBridge share about half of their membership.

BRICS has long been involved in efforts to devalue the global financial system. While it has so far had little success in achieving that goal, the focus on alternative currency options at the group's meeting in Kazan, Russia, in early October has shaken international observers.

Rethinking international transfers

Project mBridge's appeal to potential sanctions is to develop a messenger banking system, a practical method of sanctions relief.

Carstens is also eager to lead another BIS venture – Project Agora – which is the basis for the Global Financial Architecture concept he introduced in April.

The Bank of France (representing the Eurosystem), the Bank of Japan, the Bank of Korea, the Bank of Mexico, the Swiss National Bank, the Bank of England and the Federal Reserve Bank of New York are all participants in Project Agora – the BRICS members are not. Crucially, Project Agora protects the correspondent banking system.

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