China-led CBDC platform 'Multilateral Central Bank Digital Currency Bridge' surpasses $55 billion in transaction volume... Is the 'de-dollarization' accelerating?

Led by China, the cross-border central bank digital currency (CBDC) project “Multilateral CBDC Bridge (mBridge)” is attracting global financial market attention with remarkable growth.

On the 16th (local time), according to the latest data from Reuters and the Atlantic Council, the total transaction volume on the mBridge platform has exceeded $55 billion (approximately 74 trillion Korean won). This is seen as a sign that efforts to reduce dependence on the US dollar are making significant progress.

◇ Transaction scale surges by 2,500 times… Renminbi accounts for 95%, showing overwhelming dominance

According to analysis by the Washington think tank Atlantic Council, the mBridge platform has processed over 4,000 cross-border transactions, totaling about $55.5 billion. Compared to the initial transaction volume of only $22 million in October 2022, this figure has increased nearly 2,500 times.

Of particular note is the overwhelming share of digital renminbi. About 95% of the payment volume is completed through digital renminbi, which essentially indicates that China is leading the cross-border payment market via this platform.

◇ Can it become a SWIFT alternative… “A gradual challenge to US dollar hegemony”

mBridge is a multilateral CBDC platform jointly developed by the Bank for International Settlements Innovation Hub, the People’s Bank of China, the Hong Kong Monetary Authority, the Bank of Thailand, and the Central Bank of the United Arab Emirates. Recently, the Saudi Central Bank has also joined.

The project’s feature is that it does not need to go through the traditional SWIFT network; central banks of different countries can connect directly to conduct real-time, low-cost foreign exchange transactions and settlements.

Maya Nikolaez, Deputy Director of the Atlantic Council, analyzed in an interview with Reuters: “China does not intend to immediately replace the US dollar, but is building a ‘parallel settlement track’ that reduces reliance on the dollar system. Even if mBridge does not cause a direct impact on US dollar hegemony, it can gradually erode its influence within certain ranges and fields.”

◇ Expansion of practical application scenarios… already used in UAE government transactions

In fact, the scope of mBridge’s application is expanding into the public sector. In November last year, the UAE Ministry of Finance and Dubai Ministry of Finance successfully completed intergovernmental financial transactions using wholesale digital dirhams via the mBridge platform, verifying its effectiveness in public sector payments.

Industry experts predict that as mBridge currently enters the “Minimum Viable Product (MVP)” stage, the proportion of renminbi payments will further increase in fields such as bulk commodity or energy transactions.