The Bank of China quietly launched the Renminbi Digital cross-border payment system. It is connected to 10 ASEAN countries and 6 Middle Eastern countries. Up to 40% of international trade is conducted through the digital yuan, bypassing SWIFT and the dollar. Payments in SWIFT take days, while in the network system they take a few seconds.
1. What the evidence shows
a. e-CNY / China’s CBDC ambitions
The People’s Bank of China (PBOC) has developed a central-bank digital currency known as the e-CNY (digital renminbi).
The PBOC has explicitly set out that one of e-CNY’s objectives is to explore cross-border payments (i.e., settlements and transfers across national borders).
China has built / is building payment infrastructure for international settlement of the renminbi: for example, the Cross‑Border Interbank Payment System (CIPS), which clears cross-border renminbi transactions.
China has publicly signalled that it supports advancing “multi-polar currency” systems and strengthening the international role of the renminbi.
b. Payment speed, cost claims
Multiple sources state that digital or CBDC-based payments (including in China’s case) reduce settlement time (from days to seconds) and cost (from high fees/intermediaries to much lower costs).
The DBS insight indicates that e-CNY’s network has potential for peer-to-peer or near-instant settlement, which contrasts with older payment rails involving multiple intermediaries.
c. The claim of linkage to 10 ASEAN + 6 Middle East countries
A source from LedgerInsights warns that a widely circulated claim — that China has fully linked its digital-yuan cross-border system to “10 ASEAN countries and 6 Middle Eastern countries” — lacks a verifiable reliable primary source and likely is exaggerated or premature.
Hence: the statement that “up to 40% of international trade is conducted through the digital yuan” is not verifiable with credible public data. I found no reliable data confirming that magnitude of trade.
2. What remains uncertain or questionable
The claim of 40% of international trade being settled in digital yuan (or bypassing SWIFT) is extremely unlikely at present. No credible mainstream financial institution or central bank report supports such a large share.
The nature of “bypassing SWIFT” is nuanced: while systems like CIPS are alternatives for RMB clearing, many transactions still rely on SWIFT messaging channels even when settled in RMB.
The extent of usage of e-CNY cross-border is still modest and in pilot or early rollout phases, rather than full-scale global network. For example, adoption lags domestic payment systems.
The statement of “payments in the network system take a few seconds” is plausible in a pilot context, but scaling to large-volume cross-border trade (with currencies, FX, compliance) is far more complex and slower in reality.
3. Implications for Western systems
Given the above, what might the consequences be for Western financial and regulatory systems if China’s ambitions mature? I highlight the major channels, with comments on how likely/impactful each is.
Channel Mechanism of Disruption Potential Impact on Western Systems Likelihood / Notes
Currency dominance shift If the RMB (digital or not) becomes a larger share of global trade settlement, US dollar dominance would weaken. Reduced seignorage and influence of US financial system; US/EU banks lose primacy in settlement rails; potential erosion of sanctions leverage tied to dollar dominance. Medium long-term. RMB still has capital controls; trust/network effects remain with USD.
Alternative payment rails A large-scale e-CNY system or China-led payment network could reduce reliance on SWIFT & Western banks. Western banks may lose fee income; sanctions evasion becomes easier for adversaries; central banks may face pressure to integrate alternative rails. Medium. Some adoption in Asia/Africa, but widespread global shift will take years.
Sanctions/banking exclusion resilience Countries under Western sanctions (e.g., Russia, Iran) may use China’s rails or e-CNY to circumvent exclusion. Western sanctions regimes lose potency; secondary sanctions become harder to enforce; Western banks must expose risk of indirect exposure. High for adversary states; moderate for mainstream trade. Evidence exists that RMB usage rose in Russia.
Speed/cost advantage in settlement If Chinese network offers faster, cheaper settlement, companies may prefer it for efficiency reasons. Western banks face competition; risk that emerging markets pivot away from USD/Euro rails; Western regulators need to adapt. Medium-high for emerging markets; less for large institutionals currently.
Financial/litigation risk Western financial institutions may inadvertently participate in or facilitate settlements via Chinese rails (and face compliance or geopolitical risk). Need for operational risk management, legal frameworks; possibly new regulation or oversight required. Fairly high. As integration happens, these risks grow.
4. Strategic considerations / what Western policymakers & institutions should monitor
Monitor actual uptake metrics: How many cross-border trades are settled in RMB/e-CNY? What % of partner countries use e-CNY rails (not just RMB)?
Clarify infrastructure: Is the e-CNY network independent of SWIFT, or does it interoperate in part? How many intermediaries remain?
Compliance & sanctions risk: Evaluate how much settlement innovation undermines the ability of Western systems to track flows and enforce sanctions/AML.
Infrastructure investment: Western banks may need to invest in faster rails, or collaborate on digital currency rails, to avoid being out-competed.
Currency policy: A shift toward RMB/e-CNY could reduce demand for USD, possibly increasing financing costs for Western sovereign debt, and changing reserve currency balance.
Emerging market response: If many emerging markets adopt Chinese payment rails for efficiency or geopolitical alignment, Western influence may decline in those markets.
5. Assessment of the magnitude and timing
Given the evidence, a highly plausible scenario is moderate disruption over a 5-10 year horizon rather than immediate collapse of Western systems. While China is making strategic moves, structural factors (capital controls, network inertia of the dollar/Euro, trust issues, regulatory complexity) slow the pace. Hence:
In the short term (1-2 years): limited but meaningful effects—some trade settlement shifts, sanctions evasion cases, increased competition for Western banks.
In the medium term (5-10 years): greater adoption of alternative rails and currencies could erode some of the Western dominance in payments and settlement.
In the long term (>10 years): if China achieves large scale adoption of e-CNY cross-border with many partner countries, significant alteration of global financial architecture is possible.
