Saudi Exit Puts Brakes on China's Dollar Alternatives

China's efforts to reduce its reliance on the US dollar in global finance have suffered a setback. Saudi Arabia has quietly exited the mBridge digital payment platform, which Beijing had touted as an alternative to the SWIFT system dominated by the dollar.

mBridge was launched in 2021 and allows central banks to use digital currencies for transactions via blockchain technology. Initially, China, Hong Kong, Thailand, the UAE, and the Bank for International Settlements (BIS) signed up. The BIS left mBridge in October 2024, reportedly under pressure from the US.

Saudi Arabia's participation was seen as a major win for mBridge, as it serves as the foundation of the 'petrodollar' regime established in 1974. This system has since spilled over to other areas of commerce, with the greenback used in about 90% of global transactions.

Despite Saudi Arabia's exit, mBridge continues to make gains, with recent data showing a surge in transactions to over $55 billion, a roughly 2,500-fold increase since 2022. The platform's supporters argue that it may erode the dollar's dominance incrementally, but not challenge it directly.