In partnership with the Bank for International Settlements (BIS), China launched mBridge. It is a digital payment platform that offers participants the ability to bypass the SWIFT network as well as US banking institutions. This major project significantly disrupts the dominant position of the US dollar.
mBridge, a project to bypass the SWIFT system
In a collaboration, China and the Bank for International Settlements (BIS) launched mBridge. It is an innovative digital payment system that promises to transform the face of cross-border payments.
This initiative aims to reinvent the traditional model by bypassing the SWIFT system established and reducing dependence on US banks. Developed jointly by China, Thailand, Hong Kong and the United Arab Emirates, the project mBridge should present a working prototype by the end of the year.
The global financial system has long been dominated by the US dollar. Indeed, it is present in thousands of daily exchange transactions. Half of the $32 trillion annual global trade is denominated in dollars, highlighting the need for a viable alternative. This is where mBridge comes in. This platform could allow the Chinese digital yuan to become a competitive option for large commercial transactions. This calls into question the dominant position of the dollar.
An innovative project that raises concerns?
At the heart of mBridge is an innovative approach to cross-border transactions. This ambitious project aims to exploit Distributed Ledger Technology (DLT), bringing together different digital currencies from several central banks (multi-CBDC). This, in order to facilitate cross-border payments and exchanges of CBDCs between different jurisdictions.
Indeed, mBridge will allow participating central banks to issue and trade their CBDCs in real-time peer-to-peer transactions.
However, there are concerns about the geopolitical effects of mBridge. Effectively, it could be used to avoid international sanctions and regulations.
As mBridge continues to grow, it is attracting the attention of the global financial industry. It is also sparking discussions about how it could change global finance. From another point of view, this project could also mark the end of the supremacy of the dollar.
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