Saudi Arabia Joins BIS-Led Digital Currency Project, Paving Way for Less Oil Trade in U.S. Dollars

• Saudi Arabia’s central bank is now a full participant in the BIS-led Project mBridge.
• The project includes central banks from China, Hong Kong, Thailand, and the UAE.
• Project mBridge has reached the “minimum viable product” stage.
• The initiative could lead to more oil trade being conducted outside of U.S. dollars.
• mBridge transactions will use technology from China’s e-yuan and the Ethereum network.

Saudi Arabia has joined Project mBridge, a major international digital currency initiative led by the Bank for International Settlements (BIS). The project, launched in 2021, includes central banks from China, Hong Kong, Thailand, and the United Arab Emirates.

The BIS announced that Project mBridge has reached the “minimum viable product” stage. This means the project will move beyond its prototype phase, marking a significant development in the exploration of central bank digital currencies (CBDCs).

Impact on Global Trade

Saudi Arabia is a major G20 economy and the world’s largest oil exporter. Its participation in Project mBridge could lead to a shift in how oil trade is conducted, potentially reducing reliance on the U.S. dollar.

Josh Lipsky from the Atlantic Council noted that this development might scale up commodity settlements on the mBridge platform. This change was already underway between China and Saudi Arabia but now benefits from new technology.

Technological Integration

The mBridge platform is now compatible with the Ethereum Virtual Machine, which supports the Ether cryptocurrency network. The project also uses the code from China’s e-yuan, making it available to 26 other observing members.

These members include the New York branch of the Federal Reserve, the International Monetary Fund, and the European Central Bank.

This compatibility allows the platform to serve as a testbed for future digital currency innovations, potentially transforming the landscape of global trade and finance.

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