The involvement of Saudi Arabia in blockchain raises crucial questions. What are the motivations of this country to integrate this emerging technology? What could be the impacts on the global technology sector? Explore the answers to these questions and dive into a world where blockchain reveals its revolutionary potential.
Written by: Jeanne Dupont, a journalist specializing in new technologies and blockchain, strives to make complex topics accessible to the general public. Her goal is to inform and raise awareness about current technological issues. Her writing style combines clarity, precision, and a touch of creativity to captivate her readers’ attention.
Saudi Arabia and the mBridge Project
Saudi Arabia has recently joined the new international payment system project, mBridge. Initiated by the Bank for International Settlements (BIS) and the central banks of China, Hong Kong, Thailand, and the United Arab Emirates, this project aims to create an international payment system using central bank digital currencies (CBDC).
The main role of mBridge is to enable instant cross-border transactions through a blockchain, which eliminates long confirmation delays through so-called atomic payments, meaning irreversible payments. These transactions are conducted via the “HotStuff” consensus mechanism, the same as that intended for Facebook’s Libra project and used by Ethereum for its staking protocol.
Saudi Arabia’s Participation
With the recent integration of Saudi Arabia into the project, mBridge has reached a significant milestone. Central banks have deployed validation nodes, and some commercial banks have already conducted test transactions. The Chinese giant Tencent is also participating in the development and validation of use cases for cross-border payments.
By joining this network, Saudi Arabia signals its intention to reduce its dependence on the US dollar, a decision that could have major repercussions on global trade. Saudi oil exports to China could thus be conducted in yuan via the mBridge blockchain.
Geopolitical and Economic Impact
This development is not isolated. Member countries of the BRICS (Brazil, Russia, India, China, South Africa) clearly express their desire to eliminate the dollar from their trade. At the same time, the Central Bank of the United Arab Emirates and the People’s Bank of China have signed an agreement to renew a currency swap, aiming to enhance cooperation in CBDC development.
These movements are to be linked to the statements of Vladimir Putin during the St. Petersburg Economic Forum: “BRICS countries are working on their own payment system, free from political pressures, abuses, and external interference.”
What Governance for mBridge?
The question of the dollar’s dominance in this new system remains pending. Currently, the dollar does not exist in CBDC form, and Donald Trump has stated that there would be none if he were elected. However, the American Federal Reserve is exploring the advantages and potential risks of CBDCs through research and technological experimentation.
It is important to note that the BIS, which oversees the mBridge project, is an institution aligned with Western interests, based in Switzerland, and counts among its observer members entities such as the IMF, the ECB, and the Federal Reserve Bank of New York.
Bitcoin vs mBridge
While mBridge represents an attempt to modernize the existing system, Bitcoin offers a completely different alternative. Bitcoin is both a currency and a payment network, neutral and state-less, making it particularly resistant to geopolitical censorship.
Here is the opinion of Michael Saylor on the subject:
“The global banking system is tied to a fiat asset, the dollar, which collapses 7 to 10% per year and is supervised by the Fed. This does not mean that banks are bad in themselves. The problem is that we have a unique toxic asset [the dollar]. A fragile asset because it is centralized. Imagine a world where 50,000 banks use Bitcoin with P2P settlements between them. Ask Australia’s bank, Austria’s bank, or China’s bank if they wouldn’t want to have an asset that does not lose 7 to 10% of its value annually.”
Thus, it may be time for Washington to accept losing its monetary hegemony, inherited from the end of the gold standard, in favor of a more balanced international monetary system. And what better than Bitcoin to replace it?
