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The Bank for International Settlements (BIS) is withdrawing its involvement in Project mBridge, a tech initiative aiming to develop a digital currency system for global central banks. The project, which began in 2021, was initiated by financial authorities from multiple nations including China, the UAE and Thailand. Questions emerged over whether the project could be used by countries like those in BRICS (Brazil, Russia, India, China, South Africa) to evade sanctions and pivot away from the US dollar. But BIS boss, Augustín Carstens, denied these allegations, shifting attention to another BIS initiative, Project Agora.

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The Bank for International Settlements (BIS) is stepping back from Project mBridge, a program it’s helped develop since 2021. This tech project, aiming to create a digital currency system for central banks, still has a long way to go before it’s ready to roll.

The technology for Project mBridge was developed by the Hyperledger Foundation. It finally reached a stage where it was ready to invite private businesses to join the venture in June. Big banking players in China and the UAE have already jumped on board.

Apart from the BIS, the project was kick-started by the financial authorities in China, Hong Kong, Thailand, and the UAE. Then, Saudi Arabia joined the gang in June and there are over 25 members watching from the sidelines.

BIS boss, Augustín Carstens, had to face some questions recently about whether this project might be a way for some countries to dodge sanctions. He denied this, making it clear that BIS doesn’t work with any countries that are under sanctions.

An organization called BRICS (including Brazil, Russia, India, China, and South Africa) has been looking at ways to move away from using the US dollar for years. Interestingly, many countries have joined BRICS and are also involved in Project mBridge, leading some folks to wonder if there’s a connection.

BRICS has been championing the idea of not relying on the US dollar in international finance. Despite not having much success so far, they keep pushing other options. This raised eyebrows at a recent summit they held in Russia.

One possible appeal of Project mBridge for countries wanting to evade sanctions is that it allows them to bypass the traditional banking system, which is how sanctions are usually enforced. Carstens would rather shift the focus to another BIS initiative – Project Agora – which might lay the groundwork for a new global financial system, which he floated back in April.

The players in this new venture include lots of European and Asian central banks, as well as the Federal Reserve Bank of New York. Importantly, none of the BRICS countries are involved and the project still works within the existing banking network.

Source: Cointelegraph