Reconstructing the International Settlement System: Characteristics, Motivations, and Challenges of the Multilateral Digital Currency Bridge

As global economic cooperation deepens and the international security landscape evolves, the need for a more inclusive and secure cross-border settlement system has become paramount. This system must support productivity growth and global security. The Multilateral Digital Currency Bridge (MDCB) emerges as an innovative financial infrastructure with the potential to revolutionize traditional international settlement systems. By facilitating diversified payment currencies, decentralized settlement structures, and non-hegemonic settlement instruments, the MDCB can foster a healthier global political economy.The development of the MDCB is driven by shifts in structural power. It seeks to address inherent contradictions within the existing financial system, fulfill the evolving material needs of reshaped production structures, respond to genuine security concerns, and leverage advancements in knowledge structures. The limitations and contradictions
within the current international settlement system create a strong demand and ample application prospects for financial innovations like the MDCB. However, geopolitical evolution and great power competition may significantly influence the development of the MDCB. Challenges remain, including technical uncertainties, regulatory inconsistencies across jurisdictions, difficulties in integrating with existing international financial systems, and potential shortages of digital liquidity assets. The successful implementation and development of the MDCB will depend on a confluence of factors.

Keywords: MDCB, International Settlement System, Central Bank Digital Currency, Blockchain