Further, a cross-border, real-time and ledger-based payments system, mBridge, is being developed in tandem with the Bank for International Settlements, the Hong Kong monetary authority, and the Thai, UAE, and Saudi central banks (Jones, 2024).<sup>5</sup> Tencent was involved in designing its architecture, and the project successfully settled a \$22 m transaction in 2023. mBridge and the e-CNY raise the possibility of a multi-central bank digital currency bypassing US financial infrastructure (Nölke, 2022). Moreover, private systems like Alipay and Wechat Pay’s overseas adoption and interoperability with foreign payments systems are boosted by large-scale Chinese tourism and trade invoicing (Chorzempa and Spielberger, 2025). Choyleva (2022) suggests that the transition to an e-CNY could potentially make China more likely to liberalize its capital accounts, because it offers authorities the capacity to monitor real-time data on inflows and outflows in granular fashion. In theory, authorities could pre-empt capital flight, negating the need for broadbased and permanent capital controls.
However, China’s closed capital accounts, the shallowness of its financial markets, and its mostly inconvertible currency mean that the e-CNY and its private-sector digital currencies do not appear to be viable candidates for replacing the dollar in the near to medium term (Deng, 2024). Indeed, while they may be used to settle bilateral trade, they are unlikely to be used as a reserve currency, for transactions not involving China, or for asset denomination. Nor would the present role of the United States as consumer of last resort be upset by more widespread adoption of an e-CNY alone (Eichengreen, 2021). The US role as a backstop consumer, alongside its deep and liquid financial markets, creates an ‘organic’ demand for dollars (Schwartz, 2019).
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Reinventing Capitalism
<sup>5</sup> Concern regarding China’s role prompted the BIS to withdraw from mBridge in October 2024, but the project continues to expand.