China-led cross-border digital currency platform sees surge in transactions

[LONDON] Transactions on a new China-led digital currency platform have surged to over US$55 billion, a new report shows.

It is the latest sign that efforts to build alternatives to US-dollar-dependent global payment systems are gaining traction.

Data crunched by the Washington-based Atlantic Council showed the prototype mBridge platform had now processed more than 4,000 cross-border transactions.

It is being tested by central banks in China, Thailand and the United Arab Emirates (UAE), among others.

The cumulative US$55.5 billion value of those payments represented a roughly 2,500-times increase since the project’s early days in 2022, with the digital yuan estimated to now account for about 95 per cent of the volume.

The E-CNY, as it is also known, remains the world’s largest live digital-currency experiment of a central bank.

Recent People’s Bank of China (PBOC) figures showed it processed more than 3.4 billion transactions worth roughly 16.7 trillion yuan (S$3.1 trillion), a more than 800 per cent leap from 2023.

Chinese state media reported in December that the E-CNY will also start paying interest to those holding it in their digital bank accounts or wallets in 2026, a move widely seen as designed to boost usage.

Alisha Chhangani, The Atlantic Council’s GeoEconomics Centre’s associate director, said: “Taken together, these developments point to a gradual expansion of the yuan’s internationalisation through digital infrastructure.”

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Rather than seeking to displace the US dollar outright, China and its counterparts are building parallel settlement rails, she added, that reduce reliance on existing US-dollar-based systems.

“Project mBridge is unlikely to challenge US dollar dominance directly, but it may incrementally erode it,” she said.

The PBOC did not immediately respond to an out-of-business-hours request for a comment on the figures.

The race is on

The progress of mBridge is being closely watched by policymakers globally.

It was originally overseen by the central bank umbrella body, the Bank for International Settlements (BIS), but the Switzerland-headquartered institution unexpectedly quit the project in late 2024.

Although not a direct rival, the BIS is now focusing efforts on another project with seven top, mostly Western, central banks including the New York Federal Reserve, Bank of Japan and Bank of England.

This week, the group, which is also working with more than 40 major commercial banks, said it was stepping up testing.

However, for now, Mbridge’s development remains far ahead.

The UAE’s Ministry of Finance and the Dubai Department of Finance carried out the first government transaction using wholesale digital dirham on the platform in November.

Chhangani said mBridge was likely to increasingly focus on trade settlements, particularly in energy and commodity-linked transactions, where China already plays a central commercial role. REUTERS