China Plans Mbridge Rollout To Push Digital Yuan
China is taking major steps to increase the adoption of the Chinese yuan and its digital counterpart, the digital yuan, on the international stage.
According to FT, the Chinese government is preparing for a commercial rollout of Mbridge, a system enabling cross-border settlements of digital central bank digital currencies (CBDCs) using blockchain technology.
The system, which has been in development since 2021, had the participation of China, Hong Kong, Thailand, the United Arab Emirates, Saudi Arabia, and the Bank for International Settlements (BIS). Nonetheless, due to ongoing criticism, the BIS abandoned the project in 2024, with the former BIS General Manager, Agustín Carstens, stating that the project participants would carry it out by themselves.
That same year, after reaching minimum viable product stages, Mbridge was used in 2024 to complete the first Digital Dirham cross-border settlement, with Sheikh Mansour Bin Zayed Al Nahyan, Chairman of the Board of the Central Bank of the United Arab Emirates (UAE), sending 50 million digital dirhams ($13.6 million) to China.
China would promote the system as charging half the fees of traditional systems such as SWIFT, and would set up a Hong Kong-based entity for this task. Cross-border settlements using the platform have reached volumes of 470 billion yuan, nearly $69 billion.
The move comes after the Chinese yuan has been experiencing a revival in international markets, as reports have linked its use to payments tied to the Gulf war by using the more common Cross-Border Interbank Payment System (CIPS), launched in 2015.
Wang Jian, chief financial sector analyst at Guosen Securities, told FT that Mbridge’s adoption would speed up cash turnover and reduce the risk of liquidity strains. “More broadly, it could strengthen China’s voice in the global monetary order and support the internationalization of the renminbi,” he concluded.
