Saudi Arabia exits China-backed mBridge cross-border currency platform

Analysts suggest that Saudi Arabia's departure from the China-led mBridge digital currency platform holds more symbolic than operational weight, underscoring the challenges faced by nations navigating between US dominance and alternatives to dollar-based payments infrastructure. The Saudi Central Bank confirmed participation in the mBridge platform, a multilateral central bank digital currency initiative viewed as a rival to the US dollar-dominated system, but only on a limited proof-of-concept basis, which concluded successfully in May 2023. Afterward, the bank ceased its membership in the platform.

Matteo Giovannini, senior finance manager at the Industrial and Commercial Bank of China, posited that the exit "more significantly represents a political statement than a technical one." He further explained that the move does not necessarily diminish the project's viability, highlighting the intricate geopolitical dynamics involved in developing alternative cross-border payment systems when the dollar-based financial system remains deeply intertwined with global trade and security relationships.

Giovannini, an AsiaGlobal Fellow at the University of Hong Kong, emphasized the importance of determining whether the participants can transition mBridge from a successful technical experiment towards widespread real-world adoption and a larger user network. According to Alicia Garcia-Herrero, chief economist for Asia-Pacific and the Middle East at French investment bank Natixis, the Saudi withdrawal reflects a political signal rather than a technical setback.

She noted that the platform, alongside China's Cross-Border Interbank Payment System, is part of Beijing's broader strategy to establish alternatives to the traditional US dollar-centric payment networks. This effort has gained traction in recent years due to escalating tensions between the world's two largest economies and concerns over the potential weaponization of the US dollar.

The mBridge platform, which includes the central banks of mainland China, Hong Kong, Thailand, the UAE, and Macau, continues to operate despite the Saudi Arabia's withdrawal. The Bank for International Settlements (BIS), which played a key role in launching the project in 2021, withdrew in October 2024, citing that its central bank partners were well-positioned to advance the project independently. The BIS's decision was not driven by political considerations.

De-dollarisation efforts have encountered pressure from Washington, exemplified by US President Donald Trump's threats of imposing 100 percent tariffs on Brics countries if they pursue the creation of a new currency or supplant the US dollar. The Brics alliance, originally comprising Brazil, Russia, India, China, and South Africa, has since expanded significantly. Analysts warn that third countries are increasingly being caught in the crossfire of great power competition, with the US often taking the offensive role.