The Bank for International Settlements (BIS) has been involved with the mBridge cross border CBDC payment system for four years. Today the General Manager of the BIS, Agustín Carstens, said the project has been handed over to the central banks. They are the central banks of China, Hong Kong, Saudi Arabia, Thailand and the UAE.
mBridge uses blockchain to enable commercial banks to make cross border payments using wholesale central bank digital currencies (wCBDCs). The design supports local currency payments. The G20 has goals of making cross border payments faster, cheaper and more transparent. mBridge is one of the potential solutions to make that happen.
China was responsible for the technology working group and recently shared plans to open source the blockchain-based software.
The BRICS Bridge issue
During the recent BRICS summit, discussion of a BRICS Bridge payment system continued. Given China and the UAE are BRICS members, alongside sanctioned countries Iran and Russia, the perception that mBridge could in any way overlap with BRICS Bridge put the BIS in a tricky position.
Talking today at the Santander International Banking Conference, Mr Carstens addressed the issue head on. “Whatever projects we put together should not be a conduit to violate sanctions,” he said. “mBridge is not the BRICS Bridge and I have to say that categorically. mBridge was not created to cater (to) the needs of BRICS. It was put together to satisfy broad central bank necessities.”
According to Bloomberg, the issue was discussed during last week’s IMF meetings. The potential for the BIS to withdraw was considered.
However, Mr Carstens stated that politics was not the driver of the BIS handover.
“I would say that the project has been so successful that we can declare that we’ve graduated out of that project. The BIS is leaving that project. Not because it was a failure and not because of political considerations, but mostly because we have been involved for four years and it is at a level where the partners can carry it on by themselves,” said Mr Carstens.
The mBridge project progressed to the minimum viable project (MVP) stage in June, although Mr Carstens said is still needs many years of work. “mBridge is not mature enough to start operating,” he added.
mBridge Steering Committee thanks the BIS
In a statement, the mBridge Steering Committee expressed its appreciation to the BIS, saying the handover would allow the BIS to redirect resources to other innovation projects at earlier stages.
“The project team remains fully committed to unlocking the full potential of the mBridge platform and will continue to explore the potential for advancing the platform from the MVP to the full production stage,” the Committee stated.
“The handing over of the mBridge project to the participating central banking institutions will have no impact in relation to the legal and operational arrangements on the existing and new participating commercial banks.”
Meanwhile, earlier this week the Bank of China (Hong Kong) announced it is the first fully operational Hong Kong bank that has integrated with mBridge. It will use the platform for select corporate customer payments.
