China's mBridge Platform Experiences Rapid Growth in Cross-Border Digital Currency Transactions

The cross-border digital currency platform mBridge, which is led by China and involves several Asian and Middle Eastern central banks, has recently seen its transaction volume soar past $55 billion. According to an analysis conducted by the Atlantic Council, a Washington-based think tank, the platform has facilitated over 4,000 cross-border payments so far. The combined transaction value of approximately $55.5 billion marks an impressive rise, reflecting roughly a 2,500-fold increase from the early period of the platform's experimental phase in 2022. The vast majority of these payments, about 95%, have been carried out using the digital yuan, also known as the e-CNY, which remains the largest live central bank digital currency (CBDC) initiative worldwide. Latest figures from the People's Bank of China (PBOC) reinforce the significance of the e-CNY's progress, revealing it has handled in excess of 3.4 billion transactions amounting to nearly 16.7 trillion yuan (around $2.4 trillion). This represents an increase of more than 800% compared to 2023 levels. Additionally, Chinese state media reported in December that beginning this year, holders of e-CNY in digital wallets or bank accounts will start to receive interest payments, an incentive that is expected to encourage wider use of the digital currency. Alisha Chhangani, an analyst with the Atlantic Council, highlights that these developments collectively demonstrate a steady expansion in the international role of the yuan through digital platforms. Rather than aiming to replace the US dollar outright, these efforts by China and its regional partners are designed to create alternative settlement mechanisms that reduce reliance on existing dollar-centric payment infrastructures. Chhangani notes, “While mBridge is unlikely to immediately displace the dollar’s dominance, it could gradually chip away at it over time.” The deployment of mBridge is under global scrutiny by policymakers. Initially managed by the Bank for International Settlements (BIS), the project saw an unexpected withdrawal by the Switzerland-based institution in late 2024. Following its exit, the BIS redirected its attention towards another initiative, involving seven prominent central banks primarily from Western countries—including the New York Federal Reserve, Banque de France representing the European Central Bank, the Bank of Japan, the Swiss National Bank, and the Bank of England. This group, which collaborates with over 40 major commercial banks, recently announced plans to accelerate its testing activities. Nevertheless, mBridge remains comparatively more advanced in its development stage. Notably, in November, the UAE’s Ministry of Finance together with the Dubai Department of Finance completed the initial government transaction utilizing wholesale digital dirham on the platform. Chhangani further comments that mBridge is expected to increasingly concentrate on settling trade transactions, especially in sectors related to energy and commodities where China maintains a pivotal commercial influence. This progression underscores the platform’s strategic role in facilitating international trade using digital currency infrastructure. The platform’s growth and focus suggest a long-term endeavor to bolster yuan usage in cross-border economic activities. As of the latest exchange rates, $1 equates to 6.9675 Chinese yuan renminbi, reflecting the currency environment within which these digital transactions operate.