Saudi Arabia has withdrawn from a Chinese-led digital currency and blockchain-based payment system designed to facilitate cross-border transactions outside the traditional U.S. dollar-dominated financial system, according to multiple reports.
The initiative, widely associated with projects such as mBridge, involves central banks collaborating on wholesale central bank digital currencies (CBDCs) to enable direct settlement between participating jurisdictions. The system is intended to reduce reliance on intermediary banks and established networks such as SWIFT, while also lowering transaction costs and settlement times. Saudi Arabia’s decision to step back comes at a time when interest in alternative cross-border payment infrastructure has been growing, particularly among emerging markets and countries seeking greater financial autonomy. However, the move underscores the complexity of aligning geopolitical strategy, financial stability and international relationships.
Strategic Balancing Between Dollar System and Alternatives
Saudi Arabia’s position reflects a broader balancing act rather than a clear rejection of digital currency innovation. The kingdom remains closely tied to the U.S. financial system through its long-standing currency peg between the Saudi riyal and the U.S. dollar, as well as its role in global energy markets where oil is predominantly priced in dollars. Any significant shift away from dollar-linked systems could have wide-ranging implications for monetary policy, capital flows and financial stability. Participation in a China-led CBDC network could also carry geopolitical implications. While China has been actively promoting the international use of its digital yuan and related payment infrastructure, closer integration into such systems may be viewed as a strategic alignment that could complicate relationships with the United States and other Western financial partners.
At the same time, Saudi Arabia has not abandoned digital finance initiatives. The country has been actively exploring blockchain-based financial infrastructure and has participated in earlier cross-border CBDC experiments, including Project Aber with the United Arab Emirates. The reported withdrawal therefore appears less about rejecting blockchain-based payments altogether and more about maintaining flexibility in how and with whom such systems are developed.
Implications for De-Dollarization and Global Payment Systems
The development highlights the challenges facing efforts to reduce global reliance on the U.S. dollar. While alternative systems such as CBDC-based payment networks promise faster settlement and reduced dependence on correspondent banking, they require broad international coordination and trust. Participation decisions are often influenced not only by technological considerations but also by geopolitical alignment, regulatory frameworks and existing financial linkages.
Saudi Arabia’s move suggests that even countries exploring diversification of payment systems may be cautious about fully committing to alternatives that could disrupt established financial relationships. For China-led initiatives, the decision could slow momentum or signal the need for a more neutral, multilateral framework to attract broader participation. For the United States and its allies, it reinforces the continued centrality of the dollar in global finance, despite ongoing discussions around de-dollarization. More broadly, the episode illustrates that the transition toward new payment infrastructures is likely to be gradual rather than abrupt. Countries may experiment with digital currency systems and blockchain-based settlement while continuing to rely on existing frameworks for the majority of international transactions.
As central banks and governments continue to explore CBDCs and cross-border payment innovations, geopolitical considerations are likely to remain as important as technological capabilities in determining which systems gain widespread adoption. Saudi Arabia’s reported withdrawal therefore reflects not just a single policy decision, but a wider dynamic shaping the future of global financial infrastructure — one where innovation, sovereignty and geopolitical alignment must be carefully balanced.