China has been showing clear signs of its intention to bring its digital yuan, known as the CBDC (Central Bank Digital Currency), into the global arena. Integrations with the Cross-Border Interbank Payment System (CIPS) and the Belt and Road Initiative (BRI) are currently in progress.
CBDC Sector Advancements
Notable fintech firms, such as MOG Digitech Holdings, are making significant progress in the CBDC sector. These companies are now exploring global use cases for the e-CNY, the digital currency issued by the People’s Bank of China.
According to the media outlet Alpha Factory, the e-CNY’s global expansion has been a key discussion point at the recent Belt and Road Forum for International Cooperation (BRF). During this forum, China signed cooperation agreements with central bankers from the United Arab Emirates (UAE) and Indonesia, focusing on digital currencies. Furthermore, economic cooperation agreements were signed by over 150 countries and more than 30 international organizations, according to Chinese state media outlets.
In addition, officials from Serbia’s central bank also signed yuan-related settlement agreements with their Chinese counterparts during the forum. The Belt and Road Forum for International Cooperation serves as a significant platform for China’s Belt and Road Initiative (BRI), an ambitious project aimed at funding infrastructure development globally.
Integration with CIPS
Chinese players in the financial sector are eager to integrate the e-CNY with the Cross-Border Interbank Payment System (CIPS). Introduced in 2015, CIPS was designed to internationalize the yuan and has been frequently considered as an alternative to the SWIFT (Society for Worldwide Interbank Financial Telecommunication) system.
“More significant still may be the fact that China’s CBDC can bypass systems like SWIFT and CIPS altogether, allowing for faster and smoother settlements in the yuan,” explains Alpha Factory.
Alpha Factory highlights that fintech solutions providers such as HSBC, Standard Chartered, and Thailand’s KTB are actively exploring the application of CBDC in cross-border payments. These companies have already accumulated technology and successful use cases in this field.
Sifang Jingchuang, another player in the financial industry, has been assisting financial institutions in various regions to participate in the application and promotion of the digital yuan, thereby aiding its global adoption.
