The Digital Yuan (e-CNY) as a Pioneer with the mBridge Project

Over recent decades, while sustaining a sharp growth of its GDP, per capita income, and HDI, China has been seeking ways to diversify its commercial relations on a global level. Given the strength of the dollar in international exchange, the Chinese have found a pathway in the digital yuan (e-CNY) that could, in the medium to long term, change the rules of the game – broadening the reach of the Chinese currency in economic transactions.

The e-CNY functions as a Central Bank Digital Currency (CBDC), serving as a digitized, sovereign version of the traditional yuan issued by the People’s Bank of China. This digital currency would have the capacity to bring greater autonomy to the country’s foreign market, in addition to streamlining cross-border trade through settlements that can be completed in just a few seconds.

Beijing holds significant influence over numerous countries, accounting for a share of over 10% in the trade flows of 158 states. The following graphs portray this dynamic, illustrating the vast number of territories that have more than a tenth of their imports or exports tied to China (Trademap):

These illustrations effectively demonstrate the Chinese economic strength in the global arena. The first chart shows that a large portion of the world imports Chinese products in volumes so significant that they exceed 10% of their total purchases. However, the same does not occur when switching to the export perspective, where few partners sell more than 10% of their total exports to China. This clear trend emphasizes the country’s economic power and its almost consistently positive trade balance.

Much of this activity is still mediated by the US dollar, which remains the planet’s primary currency. In this sense, while China may be the world’s commercial hub, the United States still functions as the center that supplies the global currency. According to international relations expert Heni Ozi Cukier, there are clear obstacles preventing the yuan from assuming this leadership role. Cukier highlights that the Chinese government would need to generate more liquidity for its asset to be freely used, allowing any institution to buy and sell it without severe restrictions, as occurs with the US currency (Os Sócios, 2025). Given this, China may not necessarily seek to have its currency lead third-party transactions but rather focus on flows between other markets and itself. Along these lines, the yuan would hardly be adopted in a trade deal between, for example, Kenya and Ethiopia, but it is entirely plausible that it be used in trade between Kenyans and the Chinese themselves.

Project mBridge as the Start for the De-dollarization of Chinese Trade

Formally launched in 2021, mBridge is a joint initiative involving the Bank for International Settlements (BIS) Innovation Hub, the central banks of the United Arab Emirates, Thailand, and Saudi Arabia, alongside the Hong Kong Monetary Authority and the People’s Bank of China. The project aims to interconnect various local CBDCs using blockchain technology.

According to the project’s official report (2022), the multi-CBDC platform showed promise by helping different governments trade in their own currencies while bypassing traditional hurdles. In the words of the document itself: “Project mBridge tests the hypothesis that an efficient, low-cost, real-time and scalable cross-border multi-CBDC arrangement can provide a network of direct central bank and commercial participant connectivity and greatly increase the potential for international trade flows and cross-border business at large.”

The architecture of this arrangement eliminates the need for conventional correspondent banks and intermediary exchanges (Demertzis and Lipsky, 2023). Each participant thus far has proved capable of settling mutual operations without the bureaucratic detours of the traditional system. Monetary digitization and new payment networks serve to shield the Chinese economy and its allies against potential blockades or sanctions led by Washington. By seeking solutions like mBridge, members of the ecosystem protect themselves from future retaliations stemming from latent geopolitical tensions.

It follows that the use of this mechanism transcends just technological efficiency and reaches the realm of international security. By operating outside the dollar circuit and bypassing Western mechanisms, the bloc creates an autonomous financial structure. For China, project mBridge and the e-CNY serve as strategic insurance against the hegemony of the SWIFT system. Despite historically maintaining a cautious stance toward opening its capital account, the country is currently moving toward a position of leadership and diversification in a new phase of the global economy.

Bibliography

Bank for International Settlements (2022). Project mBridge: Connecting economies through CBDC. October 2022, Available at: https://www.bis.org/publications/project-mbridge-connecting-economies-through-cbdc.pdf (Accessed 27 August 2026).

Demertzis, Maria; Lipsky, Josh (2023). The Geopolitics of Central Bank Digital Currencies. Intereconomics, 2023, v. 58(4), pages 173-177.

Trademap. China’s imports from World in 2025, by exporter. Trademap. Available at: https://www.trademap.org/en/goods/trade-indicators/imports/c/156/c/000/p/ALL/byPartner/direct/table?indicators=VAL,BAL,QTY,UV,S,SPC,SW,SPW,RK,RKP,GV5W,GQ5 (Accessed: 30 August 2026).

Trademap. China’s imports from World in 2025, by importer. Trademap. Available at: https://www.trademap.org/en/goods/trade-indicators/exports/c/156/c/000/p/ALL/byPartner/direct/table?indicators=VAL,BAL,QTY,UV,S,SPC,SW,SPW,RK,RKP,GV5W,GQ5 (Accessed: 30 August 2026).

Os Sócios. A Moeda da China Vai Superar o Dólar? | Os Sócios 230 (2025). Youtube. Available at: https://www.youtube.com/watch?v=DgM0M9lhsqM&t=20s (Accessed 27 August 2026).