Assessing the Impact of Technological Innovations on the Global Monetary System: An Analysis of the BIS Initiatives on Multicurrency CBDCs

The current global monetary system relies heavily on private correspondent banking networks to provide the public good of cross-border payments. This system is rooted in deeply asymmetric financial relations, centred around the USD and dominated by global banks acting as dealers by holding accounts with one another. This paper examines the impact of new financial technologies such as distributed ledger technology (DLT) and related changes in cross-border payment infrastructure on the global monetary architecture. To do so, It analyses the multicurrency CBDCs initiatives promoted by the BIS, specifically assessing their potential to reshape the public-private balance in cross-border payments as well as their implication for the dominance of the USD. This seems particularly relevant in light of the recent geoeconomic turn in global financial relations and the corresponding weaponisation of the USD-based banking network through financial sanctions. The BIS recent decision to step back from Project mBridge—a flagship wholesale multicurrency CBDC initiative—shortly after concerns were raised that the payments network could be used to evade sanctions, further underscores the importance of analysing the complex interplay of technology, geopolitics and private power in shaping the future of global money.