The Institute of International Finance has declared China’s digital currency irrelevant to the yuan’s international rise, but a wave of new data and infrastructure launches reveals an aggressive cross-border push, creating a stark contrast between skepticism and on-the-ground expansion. The landscape of global finance is shifting as China’s digital yuan gains traction both domestically and abroad.
IIF’s Skeptical Stance on International Role
The Institute of International Finance (IIF) has cast doubts over the potential of the digital yuan, suggesting that it serves primarily as a domestic payment solution. Economists Gene Ma and Phoebe Feng argue that the digital yuan “is merely one of several domestic e-payment solutions and is designed exclusively for onshore use.” Their analysis highlights a growing reliance on traditional cross-border mechanisms, asserting that the yuan’s notable rise in international transactions over the past five years has occurred without the influence of the central bank digital currency (CBDC).
This skepticism from the IIF reflects a broader uncertainty in the global financial community regarding the efficiency and applicability of digital currencies in international trade. Yet, while the IIF focuses on the limitations of the digital yuan, new developments indicate a more complex narrative that could challenge this perspective.
Robust Growth in Cross-Border e-CNY Use
In stark contrast to IIF’s assertions, recent statistics reveal significant growth in the use of the digital yuan in cross-border transactions. As of the third quarter of 2025, these transactions reached a remarkable $1.2 billion—a staggering 35% increase from the previous quarter. This uptick signals rapid adoption among a diverse range of stakeholders, including banks, import-export firms, and fintech platforms. Liu Wei, Director of the Digital Currency Research Institute at the People’s Bank of China (PBOC), emphasized the transformative potential of this currency, stating:
Cross-border adoption of e-CNY demonstrates the viability of CBDCs in international trade. It reduces reliance on intermediary currencies, lowers costs, and provides traceability, which is critical for regulatory compliance.Liu Wei, Director, Digital Currency Research Institute, PBOC
Major multinational corporations are already reaping the benefits of this shift. Reports reveal that companies leveraging e-CNY have seen transaction costs decrease by up to 12% while drastically reducing settlement times from several days to mere minutes. This newfound efficiency not only enhances competitive positioning but also facilitates smoother trading relationships in an increasingly digital economy.
Landmark Infrastructure and Strategic Launches
The PBOC has taken significant strides to solidify the digital yuan’s position in global finance, launching a cross-border settlement system in March 2025. This groundbreaking initiative connects China with 16 nations, allowing for instantaneous peer-to-peer transactions and slashing handling fees by as much as 98% during trials. The system represents a key element in China’s broader “Digital Silk Road” strategy, utilizing advanced technologies such as blockchain to enhance security and compliance.
Moreover, the inauguration of an international digital yuan operations center in Shanghai in September 2025 further illustrates China’s commitment to this financial evolution. Deputy Governor Lu Lei characterized this initiative as part of a “historical inevitability” in payments innovation, aiming to create a more efficient global system. This infrastructure is designed to not only streamline payments but also foster deeper economic ties with strategic trading partners across Asia and beyond.
Yuan Internationalization Gains Momentum
The yuan is asserting itself on the international stage, with its share of global foreign exchange trading volume surging to 8.5% in 2025. This impressive growth positions the yuan as the fifth-most traded currency, trailing only major players like the US dollar and euro. Significantly, over half of China’s cross-border trade is now settled in yuan, signifying an increasing confidence from international partners. Understanding the implications, Zhang Lei, Senior Economist at the China Institute of Finance, noted:
Regulatory clarity reduces uncertainty for banks and corporates, allowing them to experiment with CBDC payments without legal risks, fostering faster adoption.Zhang Lei, Senior Economist, China Institute of Finance
Trade leverage plays a pivotal role in this transformation. Certain sectors, such as steel, are now mandating yuan settlements for commodities, potentially adding tens of billions to annual RMB trade. As China strengthens its economic position, these policies are likely to shape a new landscape where the yuan becomes a linchpin of international trade, reducing reliance on traditional currencies.
Challenges and Future Trajectory
Despite its rapid growth, the digital yuan faces notable challenges in achieving widespread adoption. Integration complexities with foreign banking systems and distinct regulatory environments create hurdles for seamless transactions. Furthermore, competition from other emerging digital currencies, like the digital dollar, presents ongoing threats to the yuan’s international aspirations. Analysts project that transaction volumes could reach between $2–2.5 billion per quarter by mid-2026, underlining the importance of strategic pilot expansions in key regions such as Europe and the Middle East.
Ultimately, the long-term success of e-CNY in global transactions will hinge on its interoperability, efficiency, and ability to navigate an increasingly competitive fintech landscape. With advancements in blockchain technology and AI expected to enhance transaction security and speed, the path ahead looks promising for China’s digital currency, despite the turbulent waters of international finance.
A New Era of Global Finance Awaits
The evolution of China’s digital yuan could signify profound shifts in global finance, challenging existing currency paradigms and positioning the yuan as a strong contender on the world stage. As China continues to innovate and expand its digital financial infrastructure, businesses and nations alike must consider the implications of a more interconnected economic future. Navigating these changes will require adaptability and foresight, opening the door to potential new alliances and economic frameworks. As we stand on the cusp of this financial revolution, the question looms: will the digital yuan emerge as a tool of domestic finance or a formidable player in the global economic arena?
