SWIFT as a Geopolitical Weapon: Rise of mBridge, BRICS CBDCs, and Parallel Financial Networks

The architecture of global finance has rested on two interconnecting pillars for decades: the US dollar and the SWIFT messaging network. SWIFT (Society for Worldwide Interbank Financial Telecommunication) connects over 11,500 institutions in more than 200 countries and handles around 44 million messages a day. It does not move money itself but coordinates the instructions that enable cross-border payments. All while the dollar sits at the centre of this system as the dominant settlement currency.

Illustration by The Geostrata

The US dollar continues to represent about 50% of SWIFT transaction value in early 2025, with the euro at roughly 23% and the yuan at under 4%. This dependence of financial infrastructure on one currency, while being governed by one geopolitical bloc, gives the United States a leverage that no military asset can fully replicate: the ability to cut a country off from the global economy almost instantly.

The strategic logic of this leverage was shown dramatically in 2022 by the exclusion of seven major Russian banks from SWIFT, which accounted for approximately 700 to 800 billion dollars in annual cross-border flows, and had immediate and significant effects, with the ruble plunging more than 30% in the weeks that followed. This was not the first use of SWIFT as a policy weapon.

In 2012, Iran lost nearly half its oil revenues and saw a 30 percent decline in foreign trade after being removed from SWIFT for its nuclear program.

These events sent a clear signal to any country that maintained ambiguous relations with Washington. Participation in the global financial system was contingent on political alignment, not merely economic function.

The main geopolitical reason driving the search for alternatives is risk mitigation. After seeing Russia cut off from the global financial system, emerging countries have come to understand that financial independence requires finding alternatives to the dollar and the SWIFT system. This anxiety is not hypothetical; it is a live policy calculation in capitals from Beijing to Brasília to New Delhi.

mBRIDGE AND THE RISE OF CBDC ALTERNATIVES

The most technically advanced response to this anxiety so far is mBridge. Project mBridge was developed through collaboration between the BIS Innovation Hub and the central banks of China, Hong Kong, Thailand, the UAE, and Saudi Arabia. It reached the minimum viable product stage in mid 2024 and uses distributed ledger technology to enable instant cross-border payments and settlement, aiming to tackle key inefficiencies, including high costs, low speed, and operational complexities.

What makes mBridge structurally different from SWIFT is not just the technology but the underlying settlement logic. Instead of routing payments through a chain of correspondent banks that each require dollar liquidity and compliance with US regulatory frameworks, mBridge allows participating central banks to settle directly with each other using their own digital currencies. Early results from the platform demonstrate a substantial improvement in cross-border fund transfer speeds, from multiple days to seconds, around the clock.

The mBridge pilot, conducted in 2022, produced results that validated the platform's commercial viability with over 22 million dollars in real value transactions settled and 20 commercial banks participating across all corridors.

By 2025, activity on the platform had expanded notably in China, with regional and private sector banks beginning to use it, mirroring the phased rollout pattern that China used domestically for its digital yuan. 

The BIS, which initially incubated the project, stepped back in October 2024 once the minimum viable product stage was reached. mBridge is now managed by the participating central banks without BIS involvement. That institutional transition matters. The BIS is a body that includes Western central banks and operates with a mandate that is broadly aligned with the existing international financial order. Its departure from mBridge removes a moderating influence and leaves the project under the direct governance of states that have varying degrees of friction with the dollar system. It also leaves open the question of whether the platform will develop as a purely technical efficiency tool or as a political instrument for sanctions evasion.

INDIA, BRICS, AND THE DIGITAL RUPEE STRATEGY 

India's position in this emerging landscape is more nuanced than that of China or Russia. The Reserve Bank of India launched its wholesale CBDC pilot in November 2022 and its retail e-rupee pilot in December 2022. Digital rupee in circulation rose to 10.16 billion rupees, approximately 122 million dollars, by March 2025, up 334% from 2.34 billion rupees in 2024. India's digital currency has attracted about 7 million retail users since its launch, while the RBI has publicly expressed interest in linking India's digital rupee with other nations' CBDCs to speed up cross-border payments and expand the rupee's global footprint. 

The RBI has reportedly proposed that India use its BRICS chairmanship in 2026 to encourage member countries to adopt their CBDCs for cross-border payments.

The proposal envisages a common payments framework covering not only the five founding BRICS members but also newer members such as Egypt, Ethiopia, Iran, the UAE, and Indonesia. The approach being considered is not a single shared BRICS currency, an idea Brazil floated, and others quickly rejected. Instead, the approach aims to interconnect existing national currencies, such as India's e-rupee and Brazil's Drex, to facilitate faster cross-border payments without compromising national monetary supremacy. This is a subtler and more politically achievable architecture than a common currency, but it carries its own complications.

History shows the difficulty of local currency trade arrangements. Previous attempts by Russia and India to conduct more trade in their local currencies hit roadblocks when Russia collected large balances of Indian rupees with limited use cases. India's central bank eventually permitted investment of those balances in local bonds, but the experience highlighted the complexity of managing currency imbalances without any settlement mechanisms. 

The CBDC framework does not automatically solve this problem. It simplifies the plumbing but does not resolve the fundamental issue of trade asymmetry, which is that nations with steady surpluses build up digital balances in the currencies of their partners that they might not know how to use effectively.

CAN CBDCs REALLY CHALLENGE DOLLAR DOMINANCE? 

The question of whether these developments create a genuine threat to dollar dominance requires separating technical capability from systemic reach. On the technical side, mBridge and CBDC-linked payment rails clearly demonstrate that instant, low-cost, peer-to-peer settlement between central banks is achievable without the dollar. On the systemic side, the dollar's position rests on factors that no payment rail can easily displace: the depth and liquidity of US capital markets, the network effects of dollar invoicing in global commodity trade, the relative openness of American financial institutions to foreign investors, and the absence of capital controls that would otherwise limit the yuan's usability as a reserve or settlement currency.

China's digital yuan accounted for approximately 95.3% of transaction activity on mBridge during the pilot phase, processing 4,047 cross-border transactions worth 387.2 billion yuan, about 54.2 billion dollars. That is a meaningful number in absolute terms, but still a fraction of the trillions that move through dollar-denominated channels daily.

The risks embedded in these new architectures are also real. Cybersecurity is the most immediate concern. CBDC-linked platforms concentrate sovereign monetary infrastructure on digital networks that are attractive targets for state-sponsored attacks.

A successful breach of a multi-central bank settlement platform would have consequences that go far beyond a conventional financial fraud; it could destabilise exchange rates and trust in the entire parallel system simultaneously. Regulatory conflict is another complication. 

The US has already signaled its position clearly. President Trump has warned of 100% tariffs on BRICS nations that actively work to replace the dollar, describing BRICS efforts as anti-American. Countries like India, which rely on US market access and technology partnerships, must weigh the efficiency gains from CBDC-based trade settlement against the risk of triggering secondary sanctions or tariff escalation. Interoperability remains a third challenge.

Each CBDC system is built on its own ledger architecture, with its own compliance rules, privacy frameworks, and governance structures.

Making them communicate seamlessly requires not just technical standardisation but legal and political harmonisation across jurisdictions with sharply different regulatory philosophies.

THE EMERGENCE OF A PARALLEL FINANCIAL SYSTEM 

The traditional US-centred framework is being replaced by a competition. In East Asia, CIPS has grown enough to handle major renminbi transactions. Meanwhile, bilateral local currency agreements among BRICS countries are further weakening dollar dominance at the margins, and cross-border wholesale CBDC projects have more than doubled since Russia invaded Ukraine, with 13 such projects now active globally. 

What this suggests is not the imminent collapse of the dollar system but the emergence of a parallel layer of financial infrastructure that will handle a growing share of specific trade corridors, particularly those involving energy exporters, commodity producers, and emerging market economies that have historical or political reasons to diversify away from dollar exposure.

The world is not moving toward a single alternative financial architecture. It is moving toward a more fragmented one, where the dollar remains the dominant settlement currency for most of global trade but where an expanding set of bilateral and multilateral CBDC rails handles specific corridors outside its reach. mBridge represents the most technically credible version of this alternative layer. India's e-rupee, if successfully linked to BRICS payment infrastructure in the 2026 summit agenda, could extend that layer's reach into South Asia and the Indian Ocean trade zone.

Whether this constitutes a genuine rewiring of global finance or simply an upgrade to its margins depends on a question that no technology can answer on its own: how many countries are willing to accept the geopolitical cost of building outside the dollar system, and how many of those countries also have the economic weight to make that system worth joining. For now, the infrastructure is being built. The political commitment to use it at scale remains the missing variable.

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BY ANJANA

TEAM GEOSTRATA

info@thegeostrata.com