In 2022, China introduced a digital RMB cross-border settlement system to reduce the dependence on the US dollar in international trade and finance. With trial initiatives, China started testing the cross-border use of its digital currency in collaboration with Hong Kong, Thailand, and the United Arab Emirates (UAE).
Contrast to SWIFT, which is a messaging network rather than a payment system, the digital RMB cross-border settlement system seeks to simplify cross-border payments and potentially lessen reliance on other currencies and payment systems. SWIFT allows financial institutions to securely and uniformly exchange information, such as payment instructions, confirmations, and other financial data.
Is China shaping the rules of the financial landscape in the digital currency era?
The answer is “Yes” but How?
According to an announcement made by the People’s Bank of China on March 17, 2025, 38% of global trade volume will bypass the US dollar-dominated SWIFT system and enter the “digital RMB moment” when the digital RMB cross-border settlement system is fully connected to ten ASEAN nations and six Middle Eastern nations.
It is mentioned in an article titled “Digital RMB cross-border settlement system” that Cross-border payments still take three to five days to process through the SWIFT system, but the Chinese-developed digital currency bridge has sped up the clearing speed to seven seconds. In addition to making transactions traceable, the blockchain technology that powers the digital RMB also automatically enforces anti-money laundering regulations.
Strategically, Digital RMB is playing as the technical carrier of the Belt and Road of China. It’s worthy to mention that to create a “Digital Silk Road,” the digital RMB is completely intertwined with Beidou navigation and quantum communication in the projects like China-Laos Railway and the Jakarta-Bandung High-Speed Railway. The digital yuan, due to its purported benefits like faster and cheaper transactions, can give China the opportunity to reduce the cost and enhance financial inclusion.
China is taking over the new era of financial games clearly because when European carmakers utilize digital RMB to settle freight over the Arctic route, China uses blockchain technology to boost trade efficiency by 400%. For the first time, this virtual-real strategy threatens the US dollar’s hegemony.
In light of these developments,the introduction of the digital yuan might be a big step in the right direction as China continues to expand its influence in the global financial system through its technological prowess and foreign policy. China is establishing itself as a rising global economic power in the realm of digital currency, and it’s bringing others along in the process. Meanwhile, the United States is still debating whether digital currency poses a threat to the dominance of the US dollar, while China has quietly built a digital payment network covering 200 countries.
