The West Should Reconsider How It Conducts Its Dollar Diplomacy

Western policymakers should match the enthusiasm of Brics leaders for digitization and move to regulate digital dollars

- Andrew Gallucci

Mid the recent maelstrom of political news was an important development for the future of technology-enabled public money. During the Brics Summit in Kazan, Russia, the Bank for International Settlements revealed that it was withdrawing from the digital-asset and payments initiative Project mBridge.

Conceived in 2022 as a clearing-house for central-bank digital currencies (CBDCs), mBridge had anchored the BIS's own work towards a global interbank settlement system to connect CBDCs beyond the control of any single government. Capitalizing on the efficiency gains of blockchain technology, mBridge offered an answer to all who are disenchanted with sluggish and unaffordable cross-border payments. As recently as June, the BIS had doubled down on the initiative, adding Saudi Arabia's central bank to its roster of founding central banks and advancing it out of its pilot phase.

Doubtless buffeted by the geopolitical headwinds coming out of Kazan, BIS General Manager Agustín Carstens told a Group of 30 meeting in late October that, "we cannot directly support any project for the Brics because we cannot operate with countries that are subject to sanctions."

Carstens's comments reflect a growing tension in Western capitals. While many support efforts to use new technology to make the financial system more efficient and egalitarian, they don't want to usher in a world order that is no longer grounded in Western law and norms.