With too many controversies surrounding mBridge, is it due to political factors that BIS announced its withdrawal at this time?

BIS announced its withdrawal from mBridge, emphasizing non-political factors

According to foreign media Reuters, the Bank for International Settlements (BIS) recently announced its withdrawal from the digital currency project mBridge, jointly developed with the People's Bank of China, as well as the central banks of Hong Kong, Thailand, Saudi Arabia, and the United Arab Emirates. The project aims to simplify cross-border payment processes through Central Bank Digital Currencies (CBDC). However, according to Bloomberg's recent report, the project has raised concerns in the international community about the possibility of some countries using it to circumvent international sanctions.

BIS President Agustín Carstens confirmed the organization's exit in his speech on October 31. He emphasized that the decision was not politically motivated, but because the project had reached sufficient maturity and no longer required BIS's participation. He said, "We have contributed 4 years to this effort, and now it has matured to the point where our partners can maintain it independently."

Castens further explained that BIS typically chooses to exit when the project achieves operational stability. However, recent political developments have added complexity to BIS's exit.

International sanction concerns increase, BIS draws a clear boundary.

Last month, Russian President Vladimir Putin mentioned in a speech that the underlying technology of mBridge may become a tool to bypass Western financial sanctions, which has sparked international interest in the platform's potential uses. Although Putin's remarks did not explicitly indicate intent, it has sparked speculation that BRICS countries may use mBridge to bypass USD-based international trade restrictions.

As a global organization dedicated to promoting international monetary and financial cooperation, the BIS emphasizes its commitment to international standards and seeks to draw a clear line with any potential activities that may involve sanctions violations. Addressing these speculations, Kastens clarified, 'mBridge is not a so-called 'BRICS bridge' and is not a tool to undermine global sanctions.' He explained that the platform is still in the development stage and aims to streamline payment processes rather than challenge the existing financial system.

He added that although the development of mBridge has reached the point where BIS can exit, it will still take 'many years' before it is truly operational. He emphasized that BIS' exit does not mean the termination of the project, but rather that the project has entered a new phase.

BIS focuses on 'Finternet' and promotes a new vision of digital finance.

Despite ending its involvement in mBridge, BIS continues to advance its broader digital financial initiatives, including its vision for 'Finternet.' This conceptual framework aims to establish a connected global financial system, enhance accessibility, dropTransaction Cost, and strengthen regulatory consistency.

Castens describes 'Finternet' as built on three pillars: a robust financial architecture, advanced technology, and solid regulatory foundation. Its goal is to provide a robust infrastructure for the increasingly digital financial world by utilizing tokenization assets and programmable currency to automate and streamline the transaction process.

In addition, BIS is advancing its Agorá project through its Innovation Hub, aiming to integrate tokenized Central Bank and commercial bank currencies onto a unified ledger to address inefficiencies in cross-border payments. By focusing on interoperability and regulatory coordination, the Agorá project underscores BIS's belief that while technology is important, sustainable reform of global finance requires alignment of public and private sector objectives.

Carstens reiterated the BIS's commitment to promoting Compliance and security in its initiatives. He pointed out that the BIS will continue to support innovative financial instruments, but the true direction of future finance lies in reshaping the system to meet the needs of the digital world, enabling central and commercial banks to work together to provide accessible and secure financial solutions.

Further reading Global Central Banks face tokenization challenges! But could it be a double-edged sword? BIS report reveals significant risks BIS Survey! Central Banks around the world are starting to plan digital currencies, but CBDC still faces significant challenges? Is blockchain the future of finance? The Bank for International Settlements wants to establish 'Finternet,' how will the vision of decentralized ledger be realized?