A surprise new twist in Putin’s currency wars
Subscribe to enjoy similar stories. WHEN THE Bank for International Settlements (BIS) launched mBridge in 2021, a project aimed at revolutionising cross-border payments, it did so with much fanfare and, among some people, high expectations. The new system, which it was developing with China and others, would harness the power of digital currencies and the trustworthiness of central banks to make international financial flows faster, simpler and cheaper, it said.
Yet when the BIS withdrew from the project, it slunk away in the midst of a geopolitical stink. On October 31st Agustín Carstens, the boss of the BIS, announced that the organisation was leaving mBridge in response to a question near the end of a “fireside chat" at a banking conference in Madrid. That its participation ended not with a bang, but a whisper, hints at the high-stakes politics surrounding project mBridge.
It is being piloted by several central banks to transact across borders using digital money backed by their national currencies. That sounds reasonable enough. But as The Economist reported last week, the platform the BIS helped to develop is being eyed by Russia’s president, Vladimir Putin, as a model to create a BRICS Bridge system that would allow Russia to evade financial sanctions imposed by America by side-stepping the dollar and America’s banking system.
“We are forced to look for alternatives," he said at the BRICS summit in Kazan in Russia on October 24th. Adding to the concerns about mBridge, China is the lead technology partner in the project, responsible for its coding and software. Mr Putin’s apparent desire to mimic mBridge, perhaps with the assistance of China and others, has intensified opposition by some Western officials who have
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