The Bank for International Settlements is mulling ending a cross-border payments platform eyed by the Russian president as a tool to bypass U.S. sanctions.
The Bank for International Settlements is reportedly debating the future of its mBridge cross-border payments project after Russia‘s president Vladimir Putin flagged the technology as a potential tool to evade Western sanctions and challenge the U.S. dollar’s dominance, Bloomberg has learned, citing sources close to the matter.
Discussions about whether to shut down the project took place last week during the IMF and World Bank annual meetings in Washington, sources indicated.
The mBridge project, designed to enable direct digital transfers between central banks without reliance on U.S. financial institutions, was developed under BIS‘s Innovation Hub with participation from central banks in China, Thailand, Hong Kong, and the United Arab Emirates.
The BIS has promoted the initiative as a way to streamline cross-border transactions while potentially bypassing the current dollar-centric global financial infrastructure.
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BRICS members hesitant on dollar alternatives
At the Group of 30 event in Washington on Oct. 26, BIS general manager Agustín Carstens stressed that “we cannot directly support any project for the BRICS because we cannot operate with countries that are subject to sanctions — I want to be very clear about that.”
Despite the dollar’s entrenched role in global trade, Putin has advocated for alternative systems. In recent remarks at the BRICS summit in Kazan, he proposed creating a “BRICS Bridge” network similar to mBridge, to facilitate trade within the bloc without reliance on the dollar. The notion has been met with mixed reactions from BRICS members, Bloomberg points out, adding that nations like India and South Africa indicated reluctance to disrupt the existing global financial order.
Should the BIS withdraw from mBridge, several participating central banks might continue with the project independently, sources suggested, though Western policymakers remain wary of China’s influential role in the platform’s development and its potential to bypass established financial channels.
Read more: China Central Bankers say joint mBridge project requires mutual trust
