The development of the digital RMB (Renminbi, Chinese Yuan) is significant because it modernizes China’s financial system and offers a model for other countries developing central bank digital currencies (CBDCs). It aims to improve domestic payments, internalize the yuan, and challenges the dominance of the US dollar — although it faces challenges related to privacy, cybersecurity and international trust.

The foregoing development was recently announced by the People’s Bank of China that the digital RMB (Renminbi, Chinese Yuan) cross-border settlement system will be fully connected to the 10 ASEAN and six Middle East countries, which means that 38 percent of the world’s trade volume will bypass the US dollar dominated system (SWIFT) and directly enter the “digital RMB moment.” The financial game is rewriting the underlying code of the global economy with blockchain technology.

While the SWIFT system is still struggling with the 3-5 day delay in cross-border payments, the digital currency bridge developed by China has compressed the clearing speed to only seven seconds.

The People’s Bank of China report continued:

“The blockchain technology used by the digital RMB not only makes transactions traceable, but also automatically enforces anti-money laundering rules. In the China-Indonesia “Two Countries Two Parks” project, Industrial Bank used RMB to complete the first cross-border payment, which took only eight seconds from order confirmation to funds arrival — 100 times more efficient than traditional methods. This technical advantage has enabled 23 central banks around the world to actively join the digital currency bridge test among which Middle Eastern energy traders have reduced settlement costs by 75 percent.

“The deep impact of this technological revolution lies in the reconstruction of financial sovereignty. When the United States tried to sanction Iran with SWIFT, China had already built a close loop of RMB payments to Southeast Asia. Data showed the cross-border RMB settlement volume of ASEAN countries exceeded 5.8-trillion yuan in 2024, an increase of 120 percent over 2021.

“Six countries, including Malaysia and Singapore, have included RMB in their foreign exchange reserves, and Thailand has completed the first oil settlement with digital RMB. This wave of ‘de-dollarization’ made the Bank for International Settlements exclaim: ‘China is defining the rules of the game in the era of digital currency.’”

When European car companies use digital RMB to settle freight through the Arctic route, China is using blockchain technology to increase trade efficiency by 400 percent. This virtual-real strategy makes the US dollar hegemony feel a systemic threat for the first time.

“Today, 87 percent of the countries in the world have completed the adaptation of the digital RMB system, and the scale of cross-border payments has exceeded 1.2-trillion US dollars. While America is still debating the uncertainty of the status of its currency, China has quietly built a digital payment network covering 200 countries. This silent financial revolution is not only about monetary sovereignty, but also determines who can control the lifelines of the future global economy,” concluded the report.

What would likely happen if the secretaries of Finance and Budget and Management “put all the eggs of the Republic of the Philippines into one basket?”

Read the answer to that question in this column next week.

Email: arturobesana2@gmail.com