The digital yuan, or e-CNY, is becoming an important tool for China in shaping a new financial structure on the international stage. The development of this currency challenges the dollar's financial hegemony.
Digital Yuan: China's Strategic Tool
The Governor of the People's Bank of China, Pan Gongsheng, emphasizes the need for a multipolar monetary system. He states, "Developing a multipolar international monetary system will help strengthen global financial stability." The core of this system will be an international management center for e-CNY, backed by the CIPS system, an alternative to the SWIFT network. More than 15 banks, including Standard Bank and First Abu Dhabi Bank, have already joined this model.
Pan also denounces existing flaws: "Cross-border payment infrastructures can be politicized and used as tools for unilateral sanctions." Thus, finance is becoming a battlefield.
Widespread Adoption of the Digital Yuan
On the streets of China, e-CNY has already become a reality. Over 261 million users utilize it, with a cumulative transaction volume exceeding 7.3 trillion dollars. Daily life is changing: transportation, salaries, and taxes are now processed through the digital currency. A QR code is enough, even offline.
In Jiangsu, officials are paid in digital yuan, and in Chengdu, it is used in markets. This is no longer an experiment—it's a digital reflex.
Moreover, China's ambitions extend beyond its borders. UnionPay is developing QR payments in Southeast Asia, facilitating transactions in countries like Cambodia, Vietnam, and Laos. The mBridge network enables transactions between Hong Kong and Abu Dhabi to settle in 7 seconds with 98% reduced costs.
Digital Yuan and Global Financial Changes
The digital yuan is not merely a monetary gadget. It is a strategic instrument that reallocates balances in regions seeking emancipation from the dollar. The digital yuan has already become the third currency for global payments according to SWIFT, and the second currency used for financing trade exchanges. 38% of trade flows in Asia are settled in yuan, compared to less than 10% a decade ago.
China has activated 5 trillion yuan in currency swaps with partner central banks and has begun settling oil and gold transactions in e-CNY with countries such as Russia and Iran, which are targeted by Western sanctions. However, capital controls still hinder the free circulation of the yuan abroad.
China is moving towards creating an alternative financial system, offering a new approach to international trade and economic ties. While barriers related to capital control still exist, e-CNY could become an important player on the global financial stage and provide a sustainable option for countries seeking economic independence.
