Multi-Currency CBDC: Project mBridge, Nexus, and the Race to Build Cross-Border Digital Money Infrastructure

In 2021, the Bank for International Settlements, the People’s Bank of China, the Hong Kong Monetary Authority, the Bank of Thailand, and the Central Bank of the UAE began building a shared platform for central bank digital currencies. They called it Project mBridge. The stated purpose was technical: to test whether wholesale CBDCs — digital currencies used for interbank settlement rather than retail transactions — could move between central banks in different countries faster and more cheaply than through the existing correspondent banking system.

By 2024, mBridge had evolved from a technical experiment to a geopolitical flashpoint. The BIS withdrew from the project. US senators wrote letters. Treasury officials raised concerns in bilateral meetings. And the countries involved — China most significantly — continued developing the platform without the BIS’s participation.

The mBridge story illustrates a fundamental dynamic in cross-border CBDC development: the technology is relatively tractable, the geopolitics are not.

The Multi-CBDC Landscape

Multi-CBDC projects — platforms designed to allow CBDCs from different central banks to interoperate — exist across a spectrum of ambition and political complexity.

Project mBridge is the most operationally advanced. It uses a shared distributed ledger maintained by the participating central banks, on which each central bank issues its own CBDC. Transactions between participants are settled in central bank money on the shared ledger, without requiring correspondent bank intermediation. By the time of the BIS’s withdrawal in 2024, mBridge had conducted pilot transactions involving real value between participating financial institutions and was approaching the minimum viable product stage as an operational platform.

Project Nexus, led by CPMI with active involvement from the Monetary Authority of Singapore and BIS Innovation Hub, takes a different architectural approach. Rather than building a new shared ledger, Nexus connects existing domestic instant payment systems through a translation and compliance layer. Nexus does not require CBDCs — it can operate with any form of digital payment instrument — but CBDC integration is an intended extension. The Nexus architecture is more diplomatically accessible: it does not require countries to share infrastructure at the central bank ledger level, which reduces sovereignty concerns.

Project Dunbar — an earlier BIS Innovation Hub experiment involving Australia, Malaysia, Singapore, and South Africa — tested multi-CBDC connectivity with a focus on real-time gross settlement infrastructure. While Dunbar has been less prominent in public discussion than mBridge, its technical findings on CBDC interoperability contributed to the broader knowledge base that subsequent projects have drawn on.

Project Aber, the bilateral CBDC initiative between Saudi Arabia and the UAE, tested dual-currency CBDC infrastructure in the context of the GCC monetary system. While smaller in scale than mBridge, Aber demonstrated cross-border CBDC viability in a close bilateral relationship — a simpler version of the multi-party coordination problem.

Why the BIS Withdrew from mBridge

The BIS’s withdrawal from mBridge in 2024 was one of the most diplomatically significant moments in international CBDC development. The official BIS position described mBridge as having reached operational maturity — a positive framing that positioned withdrawal as graduation rather than exit. The political context was less ambiguous.

US Congressional and executive branch concern about mBridge centred on its potential use as a settlement infrastructure that could reduce reliance on the dollar-denominated correspondent banking system. The concern was not merely theoretical: a functional mBridge platform operated by China, the UAE, Hong Kong, and Thailand could provide a settlement rail for trade transactions that currently require dollar intermediation. If that rail were extended to additional participants — including countries subject to US sanctions — it could meaningfully reduce the effectiveness of US financial sanctions as a foreign policy tool.

The leverage that US financial sanctions derive from dollar payment system dominance is substantial. The ability to cut off entities from dollar-denominated correspondent banking — which is effectively the ability to exclude them from the mainstream global payment system — is one of the most powerful non-military policy instruments available to the US government. mBridge’s development as a settlement alternative was therefore not a neutral technical matter but a challenge to a core element of US foreign policy capacity.

The BIS, as an institution that relies on consensus among its member central banks — including the Federal Reserve — and that depends on good relations with US authorities, was not in a position to continue leading a project that the US viewed as a strategic threat. The withdrawal was diplomatically managed but reflected a real constraint on what the BIS can do when its members’ geopolitical interests diverge sharply.

Sanctions, Dollars, and Digital Money

The sanctions concern about mBridge is not hypothetical. North Korea has demonstrated that determined state actors can use crypto infrastructure to move funds that sanctions are designed to block. Russia has explored crypto alternatives to the SWIFT network following 2022 sanctions. Iran has used crypto mining and exchange access to generate and move dollar-equivalent value despite extensive sanctions.

mBridge, if extended to additional participants, would provide a qualitatively more capable alternative to the dollar payment system than existing crypto alternatives. It would involve central bank money — not private crypto — making it a more legitimate and stable settlement instrument. It would have the regulatory backing of participating central governments. And it would scale to the volume of trade transactions between major economies in ways that current crypto alternatives cannot.

The policy question this raises for Western governments is not whether to stop mBridge — that ship has likely sailed — but whether to develop alternatives that maintain Western influence over the architecture of cross-border digital money infrastructure. Project Nexus, with its hub architecture and G20 mandate, is the most developed Western-aligned alternative model. But Nexus’s voluntary, standards-based approach does not have the same diplomatic urgency as mBridge’s direct challenge to dollar payment system dominance.

The Engagement vs. Withdrawal Dilemma

Western policymakers face a genuine dilemma about multi-CBDC engagement. Participating in mBridge or mBridge-like platforms provides influence over their design and governance, potentially limiting the most concerning features (sanctions-evasion capability, exclusionary membership). Withdrawing cedes that influence but avoids legitimising infrastructure that could undermine US financial foreign policy.

The BIS’s 2024 withdrawal resolved this dilemma by exit. The practical consequence is that mBridge development continues without BIS participation, potentially with a governance structure and membership that reflects less input from institutions aligned with Western financial policy objectives. Whether that outcome is better or worse than continued BIS engagement is a contested policy question — and one whose answer will depend heavily on whether mBridge’s membership and use cases expand in ways that the US and EU find strategically threatening.