June 23, 2025
By Anjali Kochhar
China is intensifying its efforts to use its central bank digital currency (CBDC), the digital yuan (e-CNY), as a strategic tool to reduce the global dominance of the U.S. dollar. During the Lujiazui Forum held on June 18, Pan Gongsheng, governor of the People’s Bank of China (PBOC), emphasised China’s commitment to building a multi-polar currency system. The goal is clear: challenge the dollar’s hegemony and create an alternative system that minimises dependence on U.S.-controlled financial networks.
A major step in this plan is the establishment of an international e-CNY operations center in Shanghai. This will work in tandem with the expansion of the Cross-Border Interbank Payment System (CIPS), which facilitates yuan-based global settlements. Already, six foreign banks including First Abu Dhabi Bank and Standard Bank have agreed to adopt CIPS, indicating a growing trust in the yuan as a viable international transaction currency.
China’s strategy stems from growing dissatisfaction among global partners with dollar-dominated infrastructures, which are often slow, expensive, and vulnerable to U.S. political influence. By rolling out a secure and efficient digital yuan, Beijing hopes to strengthen its financial independence and offer the world a credible alternative to SWIFT and U.S.-sanctioned systems.
Supporting this push, China’s cross-border yuan settlements hit a record high in March. At the same time, UnionPay has expanded QR-code-based payments in countries like Vietnam and Cambodia. Meanwhile, currency swap agreements totaling 4.3 trillion yuan with multiple partner central banks have further solidified the yuan’s standing in emerging markets.
Still, the road ahead is not without obstacles. The yuan currently accounts for just around 4% of global payments. Structural barriers such as capital controls and limited currency convertibility hinder widespread adoption. Experts believe that unless China implements financial reforms like greater transparency and loosening restrictions the yuan’s global ambitions could stall.
However, geopolitical shifts are creating an opening. As countries seek to reduce exposure to U.S. financial pressure, and with rising protectionism from the West, China’s digital yuan strategy is gaining traction. The digital yuan is no longer just a domestic innovation it is rapidly evolving into a global financial tool with geopolitical implications.
Through a blend of digital innovation, international financial alliances, and strategic policymaking, China aims to reshape the global currency order placing the yuan at the heart of a more balanced, multipolar financial world.
About the author
Anjali Kochhar covers cryptocurrency and blockchain stories in India as well as globally. Having been in the field of media and journalism for over four years now, she has developed a sharp news sense and works hard to present information that goes beyond the obvious. She is an avid reader and loves writing on a wide range of subjects.
