Saudi Arabia Joins the Bad Blockchain…

Saudi Arabia has joined the new mBridge international payment system project. One more step towards the end of the petrodollar and bitcoin…

mBridge

The Bank for International Settlements (BIS) and the central banks of China, Hong Kong, Thailand and the United Arab Emirates have been working on the mBridge project for more than three years.

It is an international payment system using central bank digital currencies (CBDCs). China is the chief architect of this project which could compete with the SWIFT network.

At its heart is a blockchain that enables instant cross-border payments via so-called atomic payments as well as foreign exchange transactions.

The term atomic simply means that, like bitcoin, payments are irreversible. They do not depend on a financial gas plant that can take several days to confirm a payment. Either the payment is instantaneous, or it does not happen.

Transactions are made through the “HotStuff” consensus mechanism. The same one that was to be used by Facebook's Libra project and which is used by Ethereum for its Staking protocol. In essence, it is an alternative to the Bitcoin Proof-of-Work mechanism. The Dashing protocol is also under study.

MBridge recently reached a major milestone with the completion of its prototype and Saudi Arabia's decision to join the project. According to the BIS, all four central banks have deployed a validator node each and a few commercial banks have already conducted test transactions. The Chinese giant Tencent has been involved since September 2023. The firm participates in the validation of use cases for cross-border payments as well as in the development of the platform.

Saudi Arabia has its back

The kingdom's integration into the BRICS club is far from trivial. The member countries are clearly displaying their intention to purge the dollar from their trade. The arrival of the Saudis could mean that Saudi oil exports to China could one day be done via the mBridge blockchain, in yuan.

Let us recall in passing that Chinese President Xi Jinping called in November 2022 from Riyadh for Gulf countries to accept the Chinese currency yuan as payment. Another unmistakable sign is that the central banks of the two countries recently signed a currency swap agreement worth 50 billion yuan ($7 billion) in November 2023.

But who knows what the United States might decide to do if it abandons the petrodollar? Is it a coincidence that the American TV channel CBS have just emerged the accusations of complicity of the Saudi government in the attacks of September 11, 2001? Is it also a coincidence that the Saudi Minister of Defense moved in China this week?

The Central Bank of the United Arab Emirates and the People's Bank of China also signed a agreement to renew a currency swap with a view to strengthening cooperation on the development of central bank digital currencies.

These maneuvers should be compared with the statements made by Vladimir Putin at the St. Petersburg Economic Forum:

“BRICS works on its own payment system, free from political pressure, abuse… and external interference. »

It is very likely that the Russian president is referring to mBridge here. The Russian central bank already has its own CBDC.

Who will control mBridge?

Will the mBridge payment system support the dollar? For the moment, the dollar does not exist in the form of CBDC. Donald Trump has also declared that there will be no CBDC if he is elected.

However, here is what we can read on the site from the American central bank:

“While the Federal Reserve has not made any decisions on implementing a central bank digital currency (CBDC), we have explored the benefits and risks of CBDCs from different angles, including through technological research and experimentation. »

Furthermore, let us point out that the BIS – which oversees the mBridge project – is a Western-based institution based in Switzerland. Not to mention that the IMF, the ECB and the New York Fed are among the ” observer members “.

Christine Lagarde declared on June 24 that the ECB has made “significant progress towards being ready to issue a digital euro, if necessary.”

Finally, all this must be put in the context of geopolitical tensions which unfortunately remain alive. An escalation of sanctions could lead to the disconnection of other countries from the SWIFT network and new freezes of foreign exchange reserves. The mBridge network could then become a fallback option.

The plan B that has proven itself for more than 15 years is obviously bitcoin…

Bitcoin > mBridge

Bitcoin is a currency and a payment network, two-in-one. It is also a stateless and neutral store of value. No nation can use it as a geopolitical weapon.

Here is the opinion of Michael Saylor about it :

“The global banking system is tied to a fiat asset, the dollar, which is collapsing by 7 to 10 percent a year and is being infiltrated by the Fed. This is not to say that banks are bad per se. The problem is that we have a single toxic asset [le dollar]. An asset that is fragile since it is centralized. Imagine a world where 50,000 banks use bitcoin with P2P clearings with each other. Ask the Bank of Australia, the Bank of Austria or the Bank of China if they wouldn't like to have an asset that doesn't lose 7-10% of its value every year. Ask them if they wouldn't like to be able to transact with any other bank in the world, peer to peer. It is an improvement of the existing system. »

The world is tired of financing American debt. The current cold war climate is largely linked to the famous exorbitant privilege of the dollar. Calm will only return with a new international monetary system. Even the Pope Francis calls for a “new international financial architecture”.

In other words, Washington will have to agree to abandon its monetary hegemony inherited from the end of the Gold Standard.

And what better than bitcoin to replace it? Mbridge would just repaint the existing system. Only one network is able to resist censorship and it is called Bitcoin.