China's leaders have long sought to reduce their dependence on the US dollar for international transactions, and recent events have given them a boost. The country's central bank has issued a digital currency, the e-CNY, which is being used by over 5,000 merchants in the city. The yuan is becoming a source of comfort for countries and firms disconcerted by America's haphazard stewardship of the truly powerful dollar.
The Cross-Border Interbank Payment System (CIPS) has seen a significant increase in transactions, with over $134 billion handled daily in March. This is a 40% increase from last year's average. The Iran crisis has been cited as a factor in the surge, with Iran's oil exports being paid for in yuan. However, the jump in CIPS activity is so large that oil and toll payments cannot account for all of it.
Project mBridge, a platform for cross-border payments in digital currencies, is also getting busier. It has gone beyond the conceptual stage to become a viable commercial proposition. The yuan's share of China's overall international transactions rose to over 56% in March, after plateauing for much of 2025.
China's low interest rates have also made the yuan an attractive option for foreign companies and governments. The central bank has cut its policy rate to just 1.4%, more than two percentage points below the equivalent rate in America. Foreign companies and governments have been keen to take advantage, issuing yuan-denominated bonds in mainland China and Hong Kong.
The Hong Kong Monetary Authority has a 200bn-yuan facility to help foreign companies borrow China's currency, at low, benchmark rates, for trade finance or working capital for up to a year. Banks like Standard Chartered can "radiate" this liquidity to their branches far beyond Hong Kong, says Karen Ng of Standard Chartered.
