This year’s BRICS Summit in Kazan saw many discussions on members using local currencies to settle trade, but it disappointed those waiting for a formal announcement of a new BRICS currency or payment system.

While Russian President Vladimir Putin called a BRICS currency “premature,” his government had been teasing for months that a payment system was in the works and that it would use blockchain.

Now, just a week after the Kazan summit, the Bank for International Settlements (BIS) has handed over the mBridge cross-border settlement system to the central banks of China, the UAE, Hong Kong, Saudi Arabia, and Thailand.

BIS boss Agustín Carstens denied the bank was removing itself due to links to BRICS, claiming that the decision was taken because the project was mature enough to hand over. “mBridge is not the BRICS Bridge, and I have to say that categorically. mBridge was not created to cater (to) the needs of BRICS. It was put together to satisfy broad central bank necessities.”

However, given that China was in charge of the mBridge working group and recently shared plans to open-source the blockchain-based software, many wonder if the BIS announcement timing is just a coincidence.

What is mBridge, and how does it work?

CoinGeek has reported on mBridge since its inception. Essentially, it’s a blockchain-based cross-border payment system between central banks that allows them to use tokenized CBDCs for atomic settlement. The idea is to speed up settlements between central banks, reduce the associated fees, and create greater efficiency.

However, given that three of the central banks in the mBridge working group (China, the UAE, and Saudi Arabia) are also in BRICS, it’s difficult not to see the link between China’s decision to open-source it, BRICS desire for an independent payment system, and the BIS’ decision to exit the project just a week after the Kazan Summit.

“Whatever projects we put together should not be a conduit to violate sanctions,” – Augustin Carstens at the Santander International Banking Conference.

Why does BRICS want an independent financial system?

BRICS started talking about de-dollarization and alternative payment systems around 2010, but the ever-louder calls for one began to grow considerably louder after Russia invaded Ukraine and the subsequent sanctions that followed.

Russian President Vladimir Putin labeled the seizing of $300 billion of his country’s currency reserves “theft.” He warned that the United States would regret using its currency and the payment system it largely controls as a weapon, predicting it would speed up the de-dollarization process.

Given how the relationship between the United States and China has soured in recent years and the ongoing tit-for-tat trade war between them, BRICS has at least two influential members with a vested interest in an alternative payment system. Since China is already the largest economy in the world on a GDP PPP basis, the successful launch of an alternative payment system to challenge SWIFT and the use of USD in international trade would pose a significant challenge to U.S. power.

Can BRICS de-dollarize anytime soon?

While BRICS has openly stated its goal to de-dollarize, the greenback will continue to play a crucial role in international trade for a while to come. The United States has the deepest capital markets; the USD is still involved in 90% of all FX transactions, and central banks hold approximately 46% of all reserves in it, meaning it is still the undisputed king of currencies.

China, Russia, and other BRICS members have a long way to go before any of their currencies can challenge the dollar in a meaningful way. However, whether mBridge is linked or not, any independence they can achieve is progress toward their goal of full de-dollarization and neutralizing the West’s ability to impose sanctions or call the shots in international commerce and trade.

Full de-dollarization may be a long way off, but BRICS is steadily marching toward it, and the pace of that march is likely to quicken in the years to come.

Watch: Finding ways to use CBDC outside of digital currencies