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China-Led Digital Currency Platform Sees Rapid Growth in Cross-Border Use

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Transactions on a China-backed cross-border digital currency platform have surged past $55 billion, signaling growing momentum behind efforts to reduce reliance on dollar-based global payment systems, according to a new report.

Analysis by the Atlantic Council shows that the prototype platform, known as mBridge, has now processed more than 4,000 cross-border transactions. The project is being tested by central banks in China, Hong Kong, Thailand, the United Arab Emirates and Saudi Arabia.

The cumulative transaction value reached $55.5 billion, representing an increase of roughly 2,500 times since the platform’s early testing phase in 2022. The digital yuan accounted for an estimated 95% of total transaction volume, underlining China’s dominant role in the system.

The digital yuan, also known as e-CNY, remains the world’s largest live central bank digital currency experiment. Recent figures from the People’s Bank of China showed the e-CNY has processed more than 3.4 billion transactions worth around 16.7 trillion yuan ($2.4 trillion), an increase of over 800% compared with 2023.

Chinese state media reported last month that holders of the e-CNY will begin earning interest on balances held in digital wallets or bank accounts later this year, a move widely interpreted as an effort to encourage broader adoption.

“Taken together, these developments point to a gradual expansion of the yuan’s internationalization through digital infrastructure,” said Alisha Chhangani, a policy analyst at the Atlantic Council.

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THE RACE IS ON
The rapid progress of mBridge is being closely monitored by policymakers worldwide. The project was originally overseen by the Bank for International Settlements, but the Switzerland-based institution unexpectedly withdrew from the initiative in late 2024.

While not a direct competitor, the BIS has since shifted its focus to a separate cross-border payments project involving seven major central banks, including the Federal Reserve Bank of New York, the European Central Bank (via the Banque de France), the Bank of Japan, Swiss National Bank and Bank of England. That group said this week it is accelerating testing in collaboration with more than 40 large commercial banks.

Despite that, mBridge remains well ahead in terms of real-world usage. In November, the UAE Ministry of Finance and the Dubai Department of Finance completed the first government transaction using a wholesale digital dirham on the platform.

Chhangani said mBridge is likely to increasingly target trade settlements, particularly in energy and commodities, sectors where China already plays a central commercial role. Rather than directly displacing the U.S. dollar, she said, the platform is creating parallel settlement infrastructure that reduces dependence on existing dollar-based systems.

“Project mBridge is unlikely to challenge dollar dominance outright, but it may incrementally erode it,” she said.

The People’s Bank of China did not immediately respond to requests for comment outside business hours.

G20 watchdog warns of “significant gaps” in global crypto regulation amid market surge

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The Financial Stability Board (FSB), the G20’s top financial risk regulator, has warned that major gaps persist in global cryptocurrency regulation, raising concerns that unchecked growth in digital asset markets could pose risks to financial stability.

In its review published Thursday, the FSB said that while progress has been made since its 2023 recommendations, regulatory frameworks remain “fragmented, inconsistent, and insufficient” to address the cross-border nature of crypto markets. The watchdog found that financial stability risks from crypto are limited for now, but are rising sharply as the global crypto market has doubled to $4 trillion over the past year, driven by surging bitcoin prices and a wave of new investors.

“These crypto assets can move across borders very easily, much more easily than other financial assets,” said John Schindler, the FSB’s secretary general, calling for stronger global cooperation.

One of the key weaknesses identified was the lack of clear and comprehensive rules for stablecoins, digital tokens typically pegged to the U.S. dollar. The market for stablecoins has grown by nearly 75% over the past year, reaching $290 billion, yet few countries have introduced complete regulatory frameworks.

The report examined 29 jurisdictions — including the U.S., EU, Hong Kong, and the UK — but noted uneven implementation and limited coordination, especially with countries such as El Salvador, which did not participate despite being home to Tether, the world’s largest stablecoin.

The FSB urged governments to accelerate rule-making and improve cross-border cooperation, warning that non-aligned jurisdictions could create regulatory blind spots. “Even if countries have their own rules, crypto companies operating offshore can still affect their markets,” Schindler said.

The warning follows recent market turbulence, including the largest crypto crash in history last week that triggered nearly $20 billion in liquidations, reviving fears of contagion risks.

Global regulators step up oversight of AI risks in finance

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Global financial watchdogs are intensifying their scrutiny of artificial intelligence (AI) in the banking sector, warning that heavy reliance on shared AI systems could threaten financial stability. As the use of AI accelerates across global markets, regulators are moving to monitor systemic risks and strengthen their own technological capabilities.

In a report published Friday, the Financial Stability Board (FSB) — which advises G20 governments — said widespread adoption of the same AI models and infrastructure could create “herd-like behaviour” across financial institutions. “This heavy reliance can create vulnerabilities if there are few alternatives available,” the FSB cautioned, warning that such concentration could amplify shocks during market stress.

A separate study by the Bank for International Settlements (BIS) urged regulators and central banks to “raise their game” in monitoring and using AI. The BIS said authorities must not only understand AI’s potential to reshape markets but also adopt the technology themselves to improve supervision and data analysis.

The report comes amid an international race — led by the United States and China — to dominate next-generation AI tools and applications, including those that underpin financial services.

While the FSB said there is currently “little empirical evidence” that AI-driven correlations have directly impacted market outcomes, it warned that AI could increase exposure to cyberattacks and algorithmic fraud.

Some jurisdictions have already acted. The European Union’s Digital Operational Resilience Act (DORA), which took effect in January, establishes new rules for digital and AI-based systems used by financial institutions.

The emerging consensus among regulators is clear: AI promises efficiency and insight, but without vigilant oversight, it could become a new source of systemic risk in global finance.