What Happened
- Asian nations are actively building financial infrastructure to reduce dependence on the US dollar for cross-border payments
- China's digital yuan (e-CNY) has transitioned from interest-free digital cash to a yield-bearing product of commercial banks, making it competitive with regular bank deposits
- The mBridge cross-border CBDC platform — originally a BIS pilot project — has processed over 4,000 transactions worth approximately $55.49 billion, a 2,500-fold increase from 2022
- India is reportedly looking to propose linking CBDCs of BRICS+ nations, though this faces geopolitical complications given New Delhi's evolving relationship with Washington
Static Topic Bridges
Central Bank Digital Currency (CBDC) — Concept and India's Digital Rupee
A Central Bank Digital Currency is a digital form of fiat money issued by a central bank, representing a direct liability of the central bank rather than a commercial bank. Unlike cryptocurrencies, CBDCs are centrally issued and regulated. India's CBDC — the digital rupee (e-rupee) — was launched as a pilot by the Reserve Bank of India in two forms: wholesale (e-W, November 2022) and retail (e-R, December 2022). The RBI derives its authority to issue digital currency from the Reserve Bank of India Act, 1934 (Section 22), as amended by the Finance Act, 2022.
- Digital rupee in circulation reached Rs 10.16 billion (~$122 million) by March 2025, up 334% year-on-year
- The pilot expanded to 17 participating banks with over 60 lakh (6 million) users by March 2025
- RBI has enabled offline payments via NFC and programmability features for targeted government transfers
- The RBI has proposed linking BRICS countries' CBDCs on the agenda for the 2026 BRICS summit hosted by India
Connection to this news: China's decision to make e-CNY yield-bearing marks a significant evolution in CBDC design worldwide. India's own digital rupee, while smaller in scale, represents a parallel effort. The proposed BRICS CBDC interlinking could create an alternative cross-border settlement mechanism that bypasses dollar-based systems entirely.
mBridge — Multi-CBDC Cross-Border Payment Platform
mBridge is a multi-central bank digital currency platform built on distributed ledger technology (DLT), enabling instant cross-border payments and settlement without relying on correspondent banking or SWIFT messaging. It was initiated in 2021 as a collaboration between the BIS Innovation Hub and the central banks of China, Hong Kong, Thailand, and the UAE. Saudi Arabia joined in 2024. The BIS withdrew from the project in October 2024 amid concerns about sanctions circumvention, but partner countries continued operations independently.
- Reached Minimum Viable Product (MVP) stage in mid-2024
- Cumulative transaction value: approximately $55.49 billion across 4,000+ transactions
- e-CNY accounts for more than 95% of settlement value on the platform
- The underlying technology enables direct central bank-to-central bank settlement, bypassing SWIFT and the dollar
Connection to this news: mBridge demonstrates that alternative cross-border payment infrastructure is no longer theoretical. Its rapid growth from a pilot to billions in settled transactions shows that the "plumbing" for de-dollarization is being laid even as the dollar's headline market share remains dominant.
Dollar Hegemony and the International Monetary System
The US dollar's dominance in global finance rests on multiple pillars: it serves as the primary reserve currency (~58% of global foreign exchange reserves), the dominant trade invoicing currency, and the vehicle currency in foreign exchange markets (appearing in 89% of all FX trades in the $9.6 trillion-a-day market). This status — termed "exorbitant privilege" by French Finance Minister Valery Giscard d'Estaing in the 1960s — allows the US to borrow cheaply, run persistent current account deficits, and project financial power through sanctions. The system is anchored by the depth and liquidity of US Treasury markets and the SWIFT messaging network through which dollar transactions are cleared.
- Dollar's share in global SWIFT payments: approximately 48-50% (2025), more than twice the euro's ~24%
- Yuan's share in global SWIFT payments: approximately 3-3.6% (2025), though rising
- Over 54% of China's own cross-border transactions were settled in RMB in 2025, up from ~15% in 2017
- Yuan's share in trade finance has grown to 6.3% in H1 2025, approaching the euro's share
- US Genius Act (2025) prohibits stablecoin issuers from offering yields — creating a competitive opening for yield-bearing e-CNY
Connection to this news: While de-dollarization in headline payment flows remains gradual, the strategic shift is occurring in financial infrastructure. The combination of yield-bearing CBDCs, alternative cross-border platforms like mBridge, and expanding offshore yuan liquidity represents a structural challenge to dollar hegemony that operates below the surface of visible market share statistics.
Key Facts & Data
- Dollar's share in global SWIFT payments: ~48-50% (2025)
- Yuan's share in global SWIFT payments: ~3-3.6% (2025)
- mBridge cumulative transaction value: ~$55.49 billion (2,500-fold increase from 2022)
- e-CNY accounts for >95% of mBridge settlement value
- India's digital rupee users: over 6 million (March 2025)
- Daily global FX market turnover: $9.6 trillion; dollar appears in 89% of all trades
- Dollar's share of global foreign exchange reserves: ~58%
- Over 54% of China's cross-border transactions settled in RMB (2025), up from 15% in 2017