BEIJING, CHINA – According to the Financial Times, Beijing is preparing a full commercial rollout of its multiple central bank digital currency ('CBDC') programme 'mBridge', following on from a record RMB 11.3bn settlement on the platform in June 2026. The transition of mBridge from a limited deployment amongst a small pool of participating monetary authorities to commercial realisation poses questions regarding the future architecture of the international monetary system.
The international monetary system, as it currently stands, is defined by two closely related features. First, the U.S. dollar functions as the premier global currency. Dollar‑denominated assets are the preferred stores of value for central banks and private investors, and the dollar serves as the settlement currency for a large share of cross‑border transactions. Dollar centrality not only grants the US the 'exorbitant privilege' of being able to run sustained trade and fiscal deficits that global markets remain willing to finance, but also allows the US exercise geoeconomic power by shutting countries out of the international dollar system. This was illustrated during the early phase of Russia's 2022 invasion of Ukraine through the exclusion of major Russian banks from SWIFT, the international payments messaging system effectively granting access to dollar funding.
Second, despite the unprecedented expansion of international trade that accompanied China's accession to the WTO in 2001, the infrastructure for cross-border payments to finance these flows remains fragmented and inefficient. Rather than moving seamlessly between payer and payee, payments between two corporates located in different countries are transmitted through a complex network of third-party intermediary banks. Because dollar liquidity is deep and transaction costs in other currencies are significantly higher, firms cannot settle directly in their own currencies, adding layers of intermediation and delay.
Rewiring Cross-Border Finance
The mBridge programme, defined as the 'Multiple CBDC Bridge' and launched in 2022 by the Bank for International Settlements ('BIS') along with a small collection of central banks, including China, sought to provide a solution to this second problem. By enabling each participating central banks to issue and transact its own CBDC on a shared distributed ledger, frictions in cross‑border payments could potentially be eliminated by replacing complex networks of correspondent banks with near real‑time, peer‑to‑peer settlement.
Yet the implications of mBridge may extend far beyond efficiency. If widely adopted, the platform would sharply reduce the need for the US dollar as a settlement currency. Payments routed through mBridge would bypass the dollar-centric correspondent banking network as well as the SWIFT messaging system that underpins it, creating a parallel settlement system outside the infrastructure through which US financial influence can be exercised.
Upon assuming a leadership role in the project following the BIS’s withdrawal in 2024, and now moving towards wider commercial implementation, China has the opportunity to simultaneously present an efficient alternative to the current system of cross‑border settlement whilst advancing a geoeconomic strategy aimed at diluting US dominance of the international monetary system. Indeed, China’s sensitivity to dollar dominance is longstanding, with People's Bank of China Governor Zhou Xiaochuan’s 2009 intervention calling for reform of the dollar‑centric system remaining a notable example.
A New Infrastructure for Influence
Widespread global adoption of mBridge, with increasing participation sustained by the network effects characteristic of shared payments infrastructures, would strengthen China's geoeconomic influence through several channels.
First, broad participation would grant China extensive visibility into real‑time global trade flows. With transactions on the platform being settled directly in wholesale CBDCs, China, as the operator of the central coordinating node, could leverage granular data on payment volumes and sectoral patterns to exercise geoeconomic control at strategically important moments. For example, if mBridge data revealed a sudden surge in semiconductor‑related imports by a rival state, China could tighten export controls on critical inputs or delay settlement windows to create targeted pressure without resorting to overt sanctions.
Second, mBridge offers participating countries aligned with China a means to sidestep the threat of US financial sanctions that stem from being deeply integrated within SWIFT. By transacting on a settlement rail outside U.S. jurisdiction, these countries would shift their financial dependence towards China, drawing them more firmly into its geoeconomic orbit. For example, as a significant number of China's Belt and Road Initiative partner countries begin to scale back their participation in the programme, mBridge offers China a new mechanism to reinforce alignment through financial rather than physical connectivity.
Finally, and most consequentially, broad‑based adoption of mBridge effectively and drastically lowers transaction costs for local‑currency settlement, eroding the dollar’s role as the world’s dominant currency and the benefits that status confers on the United States.
Even if mBridge remains a relatively niche component of global payments infrastructure, its impact does not depend on universal uptake for the effects to be significant. The core geoeconomic principle of the ‘nonlinearity of dominance’ holds that when a hegemon controls a substantial share of a strategic resource, even a small erosion of that share can sharply reduce its ability to wield power through it. Once credible alternatives exist, states can route transactions through those alternatives, reducing the hegemon’s leverage even if the alternative system is only partially adopted.
Strategy Meets Structural Dependence
The emergence of mBridge as a parallel settlement system and credible alternative to the dollar system therefore represents a meaningful challenge to US financial hegemony, even if participation remains limited to a coalition of willing states. Yet the geoeconomic promise of mBridge operates within a financial sphere shaped by structural forces that China itself has helped entrench. Indeed, China itself has been, and remains, perhaps the greatest contributor outside the US to the perpetuation of dollar dominance throughout its rise as a major global economic power.
China's development model, characterised by high domestic savings, low consumption, and resulting persistent and growing external trade surpluses generates large inflows of foreign exchange that are overwhelmingly recycled into US dollar-denominated assets. As long as China, along with other high-surplus East Asian economies, maintain this model and these global imbalances, global demand for dollar assets and hence dollar dominance will persist.
The recent U.S.-Israel conflict with Iran has prompted claims in some quarters that it has reinforced China’s emerging superpower status, with the increase in the renminbi-share of oil transactions cited as evidence. Yet any increase in the renminbi’s share of global oil trade remains marginal relative to the deeper forces sustaining global demand for dollar assets.
