CBDC-Powered Mbridge Project Sparks Concerns Over Dollar Dominance
The Mbridge project is raising concerns among American and European observers due to its potential impact on international finance.
This project involves leveraging central bank digital currencies (CBDCs) to enable rapid value transfer, potentially challenging the dominance of the U.S. dollar and existing sanctions systems. While still in its construction phase, Mbridge could have a functional prototype by the end of the year, as reported by sources familiar with the matter.
The initiative, in collaboration with the Bank of International Settlements (BIS), aims to extend the reach of the digital yuan as a trade settlement currency, posing a challenge to the global prominence of the U.S. dollar. Even the International Monetary Fund (IMF) is reportedly discussing the potential control of Mbridge by an international organization.
This innovation has prompted worries among experts that Mbridge could disrupt the conventional international financial system, enabling payments to bypass restrictions imposed by countries like the U.S. The project would establish its own blockchain-based infrastructure, bypassing systems like SWIFT and facilitating speedy settlements. Currently encompassing China, Hong Kong, Thailand, and the UAE, these nations exchanged goods worth $564 billion in 2021. The Bank of Thailand suggests that Mbridge’s technology could significantly surpass traditional payment methods, ensuring settlements occur in seconds rather than days.
The project may also expand to involve more jurisdictions, offering greater benefits to end-users and commercial banks. In a similar vein, Russia is embarking on a pilot test for its own CBDC, the digital ruble, involving 13 commercial banks. The Bank of Russia is also discussing collaborations to facilitate cross-border payments and settlements using the digital ruble.
Clever Robot News Desk 16th August 2023
