China seeks positions digital yuan for cross-border trade settlements

Cross-border e-CNY Transfer Services, or CBETS, marks Beijing’s latest step to position the digital yuan as a settlement tool for trade, remittances and other cross-border financial flows rather than purely for retail payments.

The blockchain-based infrastructure designed to support international settlements in digital yuan is run by e-CNY Centre International Company, a Shanghai-based firm that’s managed by the People’s Bank of China (PBOC), the Chinese central bank.

This June, the firm signed agreements with the first 26 direct participants for CBETS, including Standard Chartered China and Chinese bank branches in Thailand, Singapore, Laos and Qatar, extending the platform’s reach across key Asian and Middle Eastern corridors.

China’s digital currency project is now more than a decade old. The central bank established a digital currency research group in 2014, launched major public pilots in 2020, and used the 2022 Beijing Winter Olympics as a global showcase for the e-CNY.

By November 2025, PBOC reported that cumulative e-CNY transaction volume had surpassed 16.7 trillion yuan (US$2.3 trillion), with about 230 million personal wallets opened.

But those figures only tell part of the story. The e-CNY faces the entrenched dominance of Alipay and WeChat Pay, which command more than 90% of China’s third-party mobile payments market. Much of the digital yuan’s reported usage has come from policy support or back-end integration within existing payment apps rather than a wholesale shift in consumer behaviour.

That has pushed the central bank to adjust its emphasis away from retail competition towards wholesale payment infrastructure, where a sovereign digital currency may have a clearer advantage. CBETS is less a consumer-wallet initiative than an attempt to modernise the plumbing of cross-border finance.

Why wholesale

This is not a problem that’s unique to China. The global central bank digital currency (CBDC) debate has increasingly run into the same obstacle: retail adoption is difficult when private payment networks already work well.

The European Central Bank’s digital euro, the Bank of England’s retail CBDC work and several emerging-market projects all point to the same conclusion — consumer traction is hard to build when existing systems are fast, familiar and deeply embedded.

CBETS offers a different proposition. It provides 24/7 services for QR code payments, remittances, trade settlements and investment financing, with a technical architecture designed for round-the-clock cross-border execution.

Overseas participants can connect through a single Hong Kong access point, either directly with overseas financial institutions or through local payment systems via central bank interfaces, reducing dependence on layered correspondent banking relationships.

This could make CBETS a draw  because cross-border trade finance is still slow, paper heavy and operationally fragmented. Letters of credit, escrow arrangements and multi-bank settlement chains can take days to clear, especially when several jurisdictions are involved.

CBETS and a programmable e-CNY could streamline those workflows by automating payment release once a shipment is verified, customs data is confirmed or another contractual trigger is met.

It is also a response to the rise of US dollar-linked stablecoins, which are increasingly used for fast, low-cost cross-border settlement in emerging markets. For Beijing, that makes a state-backed digital yuan rail a strategic alternative to privately issued dollar tokens.

 “Financial technology is fundamentally transforming the foundational principles of cross-border payments … an effective, user-friendly and compliant cross-border payment experience will further promote the global adoption of the yuan,”  Jean Lu, chief executive of Standard Chartered Bank China, said in the announcement on joining CBETS.

Geopolitical sensitivities

CBETS does not stand alone. It complements the Cross-Border Interbank Payment System (CIPS), China’s renminbi clearing system launched in 2015 as a macro-level alternative to SWIFT for RMB settlement, and mBridge, the multilateral central bank CBDC platform developed jointly with Hong Kong, Thailand and the United Arab Emirates, alongside the BIS Innovation Hub established by the Bank for International Settlements (BIS).

Together, the three systems form a layered payment stack: mBridge provides central bank interoperability, CIPS provides messaging and RMB clearing, and CBETS gives commercial banks a direct execution layer for digital yuan settlements.

China is not just building a single platform so much as a comprehensive alternative infrastructure for trade settlement and financial messaging.

Earlier this year, the PBOC reclassified e-CNY held in commercial bank wallets as bank deposit liabilities and required banks to integrate digital yuan services into their core systems. It’s a move that gives commercial banks a clearer legal and operational basis to offer e-CNY products, helping CBETS move from pilot to practical rollout.

The infrastructure has inevitably attracted scrutiny. In late 2024, the BIS withdrew from mBridge, citing concerns over sanctions compliance and the possibility that the system could be perceived as bypassing Western-controlled messaging networks. That did not stop the project, but it did sharpen the perception that China is building a financial rail with geopolitical implications.

Saudi Arabia was an active participant during the mBridge proof-of-concept trials in 2024, but recently withdrew from its membership.  Another Gulf state, United Arab Emirates, is staying with the platform for now while maintaining active usage of dollar-based systems.

For these economies, the attraction is not necessarily ideological. It is the prospect of a parallel settlement channel that may lower costs, reduce friction and improve bargaining power, while still preserving room to operate within the existing global financial system.

The hurdles

The strongest constraint remains China’s capital controls. Foreign parties may be able to accept digital yuan for goods and services, but they still cannot freely recycle those funds into Chinese stocks, bonds or real estate without running into regulatory barriers. That limits the e-CNY’s appeal as a store of value, even if it becomes a more efficient medium of exchange in select trade corridors.

Liquidity is another hurdle. If offshore users cannot easily hedge, invest or otherwise deploy the e-CNY they receive, the usefulness of CBETS remains constrained. The platform can reduce settlement friction, but cannot by itself remove the structural tension between a closed capital account and a globally useable currency.

Network effects will also matter. For CBETS to gain real traction, it will need to on-board more regional banks across Southeast Asia and the Middle East and prove that the system offers enough operational value to justify adoption.

For CBETS to succeed, it has to pass four critical tests: deepen offshore e-CNY liquidity, expand its network of participating banks, avoid triggering political backlash from major financial hubs, and show clear business-to-business returns through faster, cheaper and more programmable settlement.

These are demanding conditions, but they will determine whether the platform matters beyond China’s policy circles.

CBETS reflects a strategic shift in China’s thinking. Instead of trying to force the e-CNY into a consumer payments battle already dominated by private apps, Beijing is aiming at the slower, less glamorous but potentially more consequential world of cross-border financial plumbing.

If the strategy succeeds, the e-CNY may matter less as a retail currency than as a trade finance rail with real international utility.

*This article was published by Asia Asset Management on August 17, 2026 under the same title.