Summary of Key Points
The People's Bank of China is advancing cross-border payments using two models for the digital yuan:
1. The Multilateral Digital Currency Bridge (mBridge), which has entered the phase of real transactions, with a cumulative transaction volume of nearly 500 billion yuan;
2. The Cross-Border Digital Currency Settlement Platform (CBETS), which has just been upgraded and signed with the first batch of 26 domestic and foreign banks.
The core goal of both is to create a new type of cross-border payment infrastructure characterized by multilateral governance and mutual benefit, without interfering with the sovereignty of other countries or imposing additional costs on institutions, thereby allowing more economies to benefit from digital convenience.
I. Two Cross-Border Payment Models: Meeting Multilateral and Bilateral Needs
Cross-border payments using the digital yuan rely on two main approaches:
- mBridge (Multilateral Central Bank Digital Currency Bridge): This is like a “transnational payment highway” built by multiple central banks, directly connecting the payment systems and digital currency systems of different countries, supporting instant transactions in multiple currencies. For example, banks in China and Thailand can transfer funds directly from one another without going through third-party institutions, eliminating intermediaries.
- CBETS (Cross-Border Digital Currency Settlement Platform): This platform acts as a “super connector,” enabling direct connections between two countries or connecting multiple countries through a central hub. Central banks, banks, and payment institutions can choose the appropriate method of integration based on their technical capabilities, offering high flexibility.
II. mBridge Has Been Launched: impressive Real-Transaction Results
mBridge officially began conducting real transactions in June 2024, with 49 banks participating (including 21 foreign banks). By the end of 2025, the cumulative transaction volume is expected to approach 500 billion yuan. Its advantages are clear:
- Fast Speed: Cross-border payments are completed in seconds, much faster than traditional methods that may take several days.
- Low Costs: Reduced intermediaries result in significant savings on fees.
- 24/7 Service: Transactions can be made anytime, not limited to working hours.
- Wide Range of Applications: It covers various scenarios such as goods trade, e-commerce settlements, and investment and financing. New features like blockchain-based letters of credit and asset transaction settlements are also being developed.
III. CBETS: A Flexible Foundation for All Institutions
The upgraded CBETS in 2026 emphasizes reusability and scalability:
- Flexible Integration: Whether you are a large bank with advanced IT capabilities or a small institution, you can choose the appropriate integration method—either direct connection or through the platform.
- Reuse of Existing Infrastructure: There is no need to build new systems; you can use your existing networks and standards, saving costs.
- Broad Business Scope: It supports both cross-border digital yuan transactions (e.g., scanning QR codes for payments) and remittances, trade settlements, and encourages innovation in financial services. Features can be upgraded as needed.
- Inclusiveness: Both domestic and foreign banks, payment institutions, and financial infrastructure providers can apply to join with relatively low barriers.
IV. Core Concepts: “Loss-Free” and Avoiding Redundant Construction
Mu Changchun has expanded the concept of “loss-free”:
- Macro Level: It does not interfere with the monetary sovereignty of other countries or affect their monetary policies.
- Micro Level: It does not require additional investments from banks or duplicate the construction of existing financial systems. Banks can simply integrate their existing systems into the new platform.
In simple terms, everyone benefits from the initiative without any disruption or waste.
V. The Ultimate Goal: Building a New Global Payment Infrastructure
Both mBridge and CBETS aim to create a new type of platform involving collaboration among central banks and financial institutions:
- Multilateral Governance: All participants have equal say, with no one country dominating the decision-making process.
- Benefiting More Economies: Regardless of whether they have their own digital currency, all can benefit from the digital yuan, promoting trade and economic growth.
- Stability and Reliability: The platform will become an important part of the international monetary system, making cross-border payments safer, more efficient, and less costly.
In summary, cross-border payments using the digital yuan are moving from a trial phase to practical application. In the future, this technology could simplify our cross-border transfers, online shopping, and international trade.
(The entire text is explained in plain language, making it easy for non-financial professionals to understand the core concepts.)