Observers are growing concerned about the Mbridge initiative, a central bank digital currency (CBDC) worldwide payment system. When complete, such a system might theoretically enable the digital yuan to reach additional nations in trade agreements, undermining the supremacy of the U.S. currency globally and evading current sanctions frameworks.
Tensions escalate between Iraq's Sunnis and Shiites: Some international observers are growing concerned about renewed civil war betwe…
— Grace Price (@GraciePriceo) May 4, 2013
Mbridge Project Worries Observers
American and European observers are concerned about the potential effects of the Mbridge project, a framework that would use central bank digital currencies (CBDCs) to move value in seconds. According to four people with knowledge of the matter, Cambridge, which is currently in the planning and prototyping stages, might have a minimal working product ready by the end of the year.
Dorries is like a lone concrete bridge support bearing witness to a cancelled engineering project – namely Dacre's appointment to Ofcom chair.
— Richard Abrams (@RJWAbrams) February 7, 2022
The system, which is being developed with the help of the Bank of International Settlements (BIS), would enable the digital yuan to expand its use as a trade settlement currency and put up a fight against the dominance of the U.S. dollar in the world of international payments.
Bringing CBDCs a Step Further
Due to its ability to transmit funds outside of the restrictions and penalties put in place by nations like the U.S., experts worry that Mbridge might upend the conventional international financial system.
CBDCs will be a step in bringing the banks into the space.
I don't think it'll be a complete takeover but Banks wont just ignore the industry.
— TanafromNZ (@TanafromNZ) April 9, 2022
Instead of depending on institutions like the Society for Worldwide Interbank Financial Telecommunication (SWIFT), which offers the common message channel for cross-border payments, the system would use its own blockchain-based rails to get around constraints. Even though Mbridge only includes China, Hong Kong, Thailand, and the UAE, $564 billion worth of commodities were exchanged between these countries in 2021.
Russia, which is under sanctions from the West, is about to launch a pilot test for the digital ruble, a CBDC, with the participation of 13 commercial banks. In order to complete cross-border payments and settlements, the Bank of Russia is also debating the integration of the digital ruble with other friendly nations.