China's mBridge CBDC and the Reshaping of Global Cross-Border Finance

The global financial landscape is undergoing a seismic shift as China's mBridge CBDC project advances from experimental phase to operational reality. By late 2025, the platform had processed 3.4 billion transactions totaling $55.49 billion, with the digital yuan (e-CNY) accounting for over 95% of settlement volume. This rapid growth, coupled with strategic technical innovations and geopolitical ambitions, positions mBridge as a formidable contender in the race to redefine cross-border finance-and, by extension, the U.S. dollar's entrenched dominance.

mBridge's Technical and Operational Progress

Project mBridge, a multi-CBDC platform developed by the Bank for International Settlements (BIS) Innovation Hub and central banks from China, Hong Kong, Thailand, the UAE, and Saudi Arabia, reached its minimum viable product (MVP) stage in mid-2024. Built on a proprietary blockchain called the mBridge Ledger, the platform enables real-time, peer-to-peer cross-border payments and foreign exchange settlements, bypassing traditional correspondent banking intermediaries. Its compatibility with the Ethereum Virtual Machine further enhances its adaptability for smart contract-enabled transactions, a feature absent in most legacy systems.

By November 2025, mBridge had executed 4,047 cross-border transactions totaling 387.2 billion yuan, with the e-CNY dominating 95.3% of the settlement volume. This dominance is not accidental but strategic: the e-CNY's recent integration of interest-bearing features has incentivized domestic adoption, positioning it as a savings-adjacent asset and a viable alternative to dollar-backed stablecoins. The platform's ability to facilitate programmable transactions and reduce costs by up to 70% in pilot scenarios has drawn interest from energy and commodity exporters, who now use mBridge for trade settlements outside the dollar system.

Geopolitical Implications: A Challenge to Dollar Hegemony

The mBridge project represents more than a technical innovation-it is a geopolitical tool. By enabling direct cross-border settlements in local currencies, mBridge undermines the U.S. dollar's role as the default intermediary in global trade. For instance, the UAE Ministry of Finance executed a government transaction using the wholesale digital dirham on the platform, signaling its potential to replace SWIFT-based systems. Such use cases are particularly appealing to Global South nations, where correspondent banking has declined due to regulatory risks and high costs.

China's broader strategy to internationalize the renminbi (RMB) is accelerating through mBridge. The e-CNY's integration into Belt and Road Initiative (BRI) trade corridors has already reduced reliance on Western-dominated financial infrastructure. Meanwhile, the U.S. remains an outlier: President Trump's 2025 executive order to halt work on a retail CBDC has left the U.S. without a digital counterpart to compete with the e-CNY. This vacuum has allowed non-USD stablecoins and CBDCs to gain traction in emerging markets, where dollarization risks are increasingly seen as a vulnerability.

Institutional Responses and the Dollar's Resilience

Despite mBridge's progress, the U.S. dollar remains the dominant reserve currency, accounting for 58% of global official foreign exchange reserves in 2024. The Federal Reserve's recent report underscores the dollar's resilience, citing its role in 50% of international payments and 88% of traded FX volumes. However, the IMF and World Bank have noted subtle shifts: central banks are diversifying reserves into nontraditional currencies like the RMB and gold, with China, Russia, and Turkey leading this trend.

The Atlantic Council warns that a decline in dollar dominance could disrupt the U.S.'s "virtuous cycle" of economic and geopolitical power, increasing borrowing costs and limiting military spending. Yet, the dollar's entrenched role in Treasury markets and global trade invoicing- 96% in the Americas and 74% in the Asia-Pacific-ensures its near-term stability. The IMF's 2025 analysis acknowledges that while CBDCs like mBridge introduce new variables, the dollar's dominance is unlikely to wane soon due to the U.S. economy's size and the depth of its financial markets.

Strategic Risks and Opportunities for Investors

For investors, mBridge presents a dual-edged opportunity. On one hand, its success could catalyze a multipolar monetary system, benefiting countries that adopt its infrastructure and RMB-based trade. On the other, a fragmented global payment landscape may increase volatility in currency markets and complicate hedging strategies. The U.S. Treasury's "Bretton Woods realignment" narrative-prioritizing national interests over multilateral reform-further complicates the outlook.

Investors should monitor three key metrics:
1. Transaction Volume Growth: mBridge's ability to scale beyond pilot phases will determine its viability as a systemic challenger.
2. Global South Adoption: Widespread use in BRI nations or BRICS economies could accelerate de-dollarization trends.
3. Institutional Responses: The IMF and World Bank's stance on CBDCs will shape regulatory frameworks and adoption rates.

Conclusion

China's mBridge CBDC is not a silver bullet for de-dollarization but a strategic lever in a broader contest for global financial influence. While the U.S. dollar's dominance remains unshaken, the platform's technical efficiency, geopolitical alignment, and growing adoption in trade settlements signal a long-term shift. For investors, the key lies in balancing optimism about mBridge's potential with caution regarding the dollar's enduring resilience. As the BIS Innovation Hub transitions mBridge to full-scale implementation, the next phase will reveal whether this digital experiment can evolve into a systemic alternative-or remain a niche challenger in a dollar-centric world.