China's Central Bank Expands Digital Yuan Pilots, Advances Cross-Border Settlement

The People's Bank of China began piloting the digital yuan in late 2019, using the central bank digital currency to improve payment efficiency and the traceability of funds. Cumulative e-CNY transactions reached 7 trillion yuan by the end of June 2024. Its cross-border rollout also bears on the internationalization of the yuan and contrasts with the US preference for privately issued stablecoins.

The PBOC has recently added lotteries, government fiscal spending and green-power tracking to its e-CNY smart-contract pilots. In June 2024, mBridge, a project led by the Bank for International Settlements Innovation Hub, reached the minimum viable product stage. Reports said its blockchain-based cross-border settlement system could cut fees by about 50% and shorten the intermediary process used in traditional SWIFT transactions.