Key takeaways
- The Central Bank of China added 26 banks to CBETS on Tuesday to boost cross-border adoption of the digital yuan.
- Mbridge reached $55 billion in volume in January, with 95% in digital yuan, aiming to challenge SWIFT’s market share.
- In April, the yuan fell to 2.85% on SWIFT as companies sought alternatives to avoid market sanctions.
China steps up global digital yuan campaign with new institutional partners
China is stepping up efforts to internationalize the digital yuan, including global institutions in its cross-border payments network.
According to local reports, on Tuesday, the Central Bank of China integrated 26 domestic and foreign institutions to a platform allowing the use of the digital yuan, the digital currency of the central bank of China ( CBDC), for cross-border settlements.
These 26 institutions are Chinese bank branches located in Brazil, Qatar, Thailand, Hong Kong and Macau, China, and will now be part of CBETS, China’s cross-border e-CNY transfer services.
Lu Jing, CEO of Standard Chartered China, who was also part of the network, highlighted the relevance of this step, emphasizing that “An efficient, convenient and compliant cross-border payment experience will further enhance the international use of the yuan.”
The Industrial and Commercial Bank of China said that CBETS participants “can leverage the platform’s capabilities to offer customers low-cost, diverse and secure cross-border digital payment services, supporting trade and investment facilitation and China’s broader push for high-level financial openness.
Reports indicate that Mbridge, a platform that also offers digital yuan settlement services, recorded over $55 billion in volume by January. 95% of this volume was transacted in digital yuan, although it is designed to support other CBDC like the digital dirham.
The move opens a new path for institutions dealing with their Chinese counterparts to avoid the traditional payment system, which can be riddled with compliance issues and secondary sanctions, and move to a reliable yuan-based payment system.
This seems to be the goal of Chinese institutions, since the use of the yuan has not increased in traditional reference networks, such as the Society for Worldwide Interbank Financial Telecommunication (SWIFT). In April, the yuan fell to sixth place in global payments, accounting for 2.85% of recorded transactions. volume.
