'"defend it from what?!" was my first reaction to this headline'

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'Four years ago, the Bank for International Settlements (BIS) — the central bankers’ central bank — unveiled an innovation project that carried the ugly moniker “mBridge”.

This aimed to create a cross-border central bank digital currency linking the central banks of China, Hong Kong, Thailand, UAE and (latterly) Saudi Arabia.

You might think this is arcane. If so, think again: the geeky project symbolises a bigger battle that could matter deeply under US President Donald Trump.

More specifically, last autumn, just before the US election, the BIS unexpectedly pulled out of mBridge, in effect ceding control to China and the rest. BIS claimed this was just because it had reached “minimal viable product” stage. But few believe this. “The Americans demanded [the BIS] stop because it’s a threat,” one participant tells me, explaining that Washington worried that “it might be used to evade [dollar] sanctions”.

And while Agustín Carstens, BIS head, publicly denied that, speculation bubbles on — not least because Trump is undeniably on the monetary warpath: on Truth Social last month he repeated threats to impose “100% Tariffs” on countries trying to “replace the mighty U.S. Dollar” with new currencies or payments systems.

So investors should watch what happens next. For while it is Trump’s threats around trade tariffs that have been grabbing headlines recently, this less-visible fight around money matters deeply. After all (as I have noted before), it is the dollar-based global financial system that is the real source of America’s hegemonic power today, and which Washington wants to defend.'

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