Global: BIS Steps Back from Project mBridge Amid BRICS Sanctions Concerns

The Bank for International Settlements (BIS) announced it has “graduated out” of Project mBridge, the cross-border central bank digital currency (CBDC) initiative it has helped develop since 2021. Although Project mBridge has reached the stage of a minimum viable product and even invited private sector participation, BIS General Manager Agustín Carstens emphasized on October 31 that the project remains years away from full operational deployment.

Project mBridge, leveraging technology from the Hyperledger Foundation, initially drew in central banks from China, Hong Kong, Thailand, and the UAE. Saudi Arabia joined as a full member in June, and the project now has over 25 observers. In addition to its core members, banks in China and the UAE have begun participating.

Reaffirming Sanctions Compliance

Speaking at the Santander International Banking Conference, Carstens addressed questions regarding speculation that Project mBridge could potentially facilitate a BRICS-led effort to evade sanctions. He clarified, “mBridge is not the ‘BRICS bridge’ — I have to say that categorically.” He further stated that BIS products cannot be used by countries under sanctions, underscoring that BIS does not operate in any capacity with sanctioned entities.

While the BIS has formally exited its role in Project mBridge, the timing of the decision has sparked speculation due to BRICS’ ongoing discussions around de-dollarization, particularly following recent summits in Kazan, Russia. BRICS has advocated for reducing reliance on the U.S. dollar, which some observers view as a precursor to possible sanctions avoidance.

Exploring Alternatives in Global Transfers

As Project mBridge circumvents traditional correspondent banking—a system central to the enforcement of international sanctions—it has attracted attention as a potential alternative for countries seeking greater autonomy in cross-border transactions. Carstens, however, highlighted another BIS project—Project Agora—which operates within the correspondent banking framework and includes participation from central banks such as the Bank of France, Bank of Japan, Bank of Korea, Bank of Mexico, Swiss National Bank, Bank of England, and the Federal Reserve Bank of New York. Project Agora has no BRICS involvement and aligns with Carstens’ vision of a “Finternet” for secure and compliant international transactions.

The BIS’s emphasis on projects like Agora reflects its commitment to enhancing global financial interoperability within a regulatory-compliant framework.