How Saudi Arabia’s mBridge Exit Exposes the Limits of China’s Financial Warfare Strategy

On September 19, 2026, Saudi Arabia publicly announced that it had completed its participation in the China-led mBridge central bank digital currency (CBDC) program over a year earlier. The Saudi Central Bank (SAMA) said its participation was primarily limited to mBridge’s proof-of-concept phase, which was completed on May 13, 2025. The delay in this announcement is critical as it demonstrates that participation in emerging payment infrastructure does not necessarily translate into long-term institutional and/or geopolitical alignment.

mBridge is an initiative that counted the People’s Bank of China, Hong Kong Monetary Authority, Bank of Thailand, Central Bank of the United Arab Emirates, and previously, SAMA. Originally led by the Bank for International Settlements Innovation Hub, mBridge leveraged wholesale CBDCs to remove intermediate correspondent banks, with the goal of lowering operational costs and transaction fees while operating independently of the U.S. dollar financial ecosystem.

SAMA’s departure from mBridge raises questions about the different ways global economies are approaching the future of cross-border payments. China is its own alternative payment infrastructure, with adoption of that same infrastructure on the rise. For China and Japan, which are East Asia’s two largest economies, this presents an interesting problem, especially because Japan is economically intertwined with China but strategically aligned with the U.S.

With this in mind, Japan’s reluctance to embrace China’s and other forms of cross-border payment networks illustrates the divide between making an alternative financial system technically available versus making it attractive for adoption for parallel usage with existing financial relationships.

China’s mBridge Push

China’s mBridge push is a key pillar in its broader efforts to expand cross-border payments on an international level in pursuit of de-dollarization. mBridge’s previous connections throughout Asia – including Hong Kong, Thailand, and Macau – when combined with international payments in countries like the UAE and Saudi Arabia, demonstrate the international reach of mBridge.

The departure of Saudi Arabia from the project highlights that while the project may be technically feasible, participation in mBridge does not necessarily translate into long-term political commitment, with this withdrawal demonstrating the geopolitical sensitivity surrounding payment infrastructure designed to reduce reliance on dollar-based infrastructure.

China’s digital yuan and broader renminbi (RMB) payment infrastructure are increasing in their international reach, particularly among Belt and Road Initiative participants. This increase in RMB-denominated transactions was most recently seen on September 24, 2026, when the Bank of Kigali connected to China’s CIPS cross-border payment network. This move made the Bank of Kigali the first financial institution in Rwanda and east/central Africa to do so, highlighting the increased connection to China’s RMB payment infrastructure.

While CIPS and Society for Worldwide Interbank Financial Telecommunication (SWIFT) perform different functions, they do operate alongside one another, with CIPS providing infrastructure for clearing and settling cross-border RMB transactions, and SWIFT providing financial messaging. This distinction is important because it could result in institutions adding Chinese payment capabilities to their existing infrastructure due to factors like customer demand or political pressure. Therefore, rather than replacing one global system with another, the more plausible development is the gradual accumulation of overlapping payment systems.

Japan’s Alternative Path

Japan is pursuing cross-border payments innovation through different institutional architecture, leveraging its existing relationships and domestic innovation to do so. This stands in contrast to China’s development of an alternative payments network centered around Beijing.

Japan’s participation as a leader in Project Agora, which counts over eight central banks, including the Federal Reserve Bank of New York, Bank of England, and Bank of Korea, and over 40 leading financial institutions, demonstrates this approach. In this light, Japan’s participation in Project Agora shows how it views cross-border payments as a problem connecting cross-jurisdictional financial infrastructure, with interoperability a prime concern for Japan.

Japan’s growing stablecoin ecosystem adds another layer to this model, with its regulatory clarity enabling private-sector payment instruments to work alongside conventional banking infrastructure. PM Takaichi’s ascension to office in late 2025 coincided with the establishment of the Japanese Yen Coin      (JPYC) stablecoin, which made history as the first regulated yen-pegged stablecoin, with Ripple receiving approval to launch its Ripple USD (RLUSD) stablecoin less than a year later in mid-2026.

Furthermore, Prime Minister Sanae Takaichi has been supportive of Web3 initiatives, pledging increased government funding and regulatory clarity to Web3 startups. Most recently, Japan’s SBI Group and South Korea’s Kyobo Life Insurance completed a direct yen-to-won stablecoin cross-border pilot, enabling a direct fund transfer without using the dollar as an intermediate currency.

While Japan is not necessarily practicing active de-dollarization, it is developing additional settlement options that can reduce its dependency on the dollar for particular transactions. At the same time, these moves highlight Japan’s desire to preserve access to dollar-centered markets when that access remains economically or strategically valuable.

Ensuring Financial Interoperability

China and Japan’s bilateral trade volume totaled $310 billion in 2025, with Japan ranking as one of China’s top four trade partners. With such a large trade volume, Chinese and Japanese institutions require payment systems that are interoperable. As a result, the growth of CIPS, Japan’s participation in international payment initiatives, and the expansion of regional payment networks could result in a more interconnected Asian financial system rather than a single replacement for the dollar.

This level of interoperability raises the question of sanctions effectiveness, particularly in today’s dynamic political environment. Some Chinese banks are currently facing U.S. sanctions over ties to Iran, with this being a hot-button issue due to CIPS’s existence outside of Western sanctions regimes. This creates a regulatory problem for banks, which must integrate with different payment rails while still navigating different regulatory regimes and ensuring financial resiliency.

Despite China being incentivized to build CIPS to internationalize RMB payment infrastructure while simultaneously promoting de-dollarization, and Japan needing to preserve access to U.S.-led financial systems while it also develops payment systems of its own, the growing multitude of overlapping systems will require much more interoperability to ensure that cross-border payments remain functional.

As a result, payment system diversification can provide states and institutions with increased resiliency but can also increase the complexity of managing financial risk.

Conclusion

Saudi Arabia’s departure from mBridge highlights the choices facing Asian economies, particularly as China continues to expand its own payment initiatives in the spirit of de-dollarization, while also needing to ensure that this same network can connect to the broader financial system. In contrast, Japan has clear financial resilience as one of China’s major trading partners, but as one of America’s major political partners.

As a result, the emerging Asian payments landscape may become a network of overlapping payment rails, particularly as banks and businesses select infrastructure based on factors like transaction costs, geopolitical considerations, and interoperability. As payment infrastructure becomes increasingly intertwined with economic security, resilience, and strategic competition, interoperability itself may become a form of strategic capacity. Countries that can connect multiple financial systems while preserving regulatory control and operational resilience may possess greater freedom of action than those dependent on a single payment architecture.