Event Overview

Recently, the People's Bank of China and eight other departments jointly issued the "Opinions on Financial Support for Accelerating the Construction of the New Western Land-Sea Corridor." For the first time, the policy explicitly includes "supporting the provinces (regions, municipalities) along the route to participate in the multilateral central bank digital currency bridge project," clearly aiming to promote the use of central bank digital currency in cross-border payments. This arrangement aligns with the ongoing multilateral central bank digital currency bridge (mCBDC Bridge) initiative, pointing towards collaboration in cross-border payments and settlements with economies such as Thailand, Hong Kong, the UAE, and Saudi Arabia, while also supporting the exploration of cross-border payment pilot projects for the digital renminbi (eCNY) between the mainland and Singapore, further expanding the role of eCNY in regional cooperation. Market discussions indicate that professional financial and macro policy observers have a generally positive sentiment towards the cross-border expansion of the digital renminbi and its potential "de-dollarization" effects, with some viewpoints even linking it to competition with crypto stablecoins like USDT. However, due to the overall limited discussion volume and lack of direct price data, this article will focus on three questions: first, what changes the policy has made at the infrastructure level for cross-border payments; second, how the combination of the New Western Land-Sea Corridor and the multilateral digital currency bridge will reshape the regional capital flow network; and third, what marginal variables this progress means for the dollar system and crypto assets given the current coverage and technological progress.

Policy and Path

From the policy background, this opinion was jointly issued by eight departments, and the goal is not merely a technical experiment but to serve the trade settlement and industrial upgrading needs along the New Western Land-Sea Corridor. This corridor connects inland provinces and regions with ASEAN and broader maritime routes, involving bulk commodities, manufactured goods, and container channels, with high frequency of cross-border payments and multiple participants. Traditional cross-border payments relying on correspondent banking face pain points in terms of cost, timeliness, and compliance coordination. According to public information, the multilateral central bank digital currency bridge project (commonly referred to as mCBDC Bridge) involves central banks and international institutions from China, Thailand, the UAE, and the Hong Kong Monetary Authority, positioned as a multilateral CBDC cross-border payment and settlement platform aimed at wholesale business. It seeks to shorten cross-border settlement links and reduce reliance on intermediary banks through distributed ledger technology, complementing existing systems like SWIFT, wire transfers, and regional fast payment systems rather than replacing them instantly. The opinion specifically mentions "exploring the promotion of cross-border payment pilot projects for the digital renminbi between the mainland and Singapore," clearly incorporating Singapore as a financial and settlement hub in Southeast Asia, which means that in the future, a collaborative network between eCNY and local currencies, as well as regional payment systems, is expected to form along the Hong Kong-Shenzhen-Singapore financial corridor, leaving greater imaginative space for subsequent settlement arrangements with Middle Eastern energy-exporting countries.

Corridor and Region

If we overlay the logistics and trade map of the New Western Land-Sea Corridor, the business scenarios released by this policy far exceed single-point experiments. This corridor links western provinces and regions such as Chongqing, Guangxi, Guizhou, and Gansu to the south, connecting to ASEAN ports and extending to the Middle East and Europe, creating high-frequency cross-border settlement demands in container trains, rail-sea intermodal transport, and bulk commodity imports and exports. Once the provinces and regions along the route connect to the mCBDC network through the multilateral central bank digital currency bridge, they can theoretically use the digital renminbi directly for wholesale-level settlement with partner central bank digital currencies in foreign trade, reducing foreign exchange transfers and long-chain reconciliations. The flow of funds is expected to evolve from "Western Region - Domestic Clearing Center - Offshore Dollar Settlement - Counterparty" to "Western Region - Multilateral Digital Currency Bridge - Counterparty Central Bank," resulting in significant savings in time and costs. Southeast Asia and the Middle East have long faced issues such as long settlement cycles, high exchange costs, and limited international acceptance of local currencies in energy, commodity trade, and tourism consumption, especially given the high dependence of Middle Eastern energy exports on the dollar settlement system, while Southeast Asia's tourism and cross-border e-commerce small, high-frequency payments are constrained by traditional cross-border card organizations and intermediary banking systems. If the multilateral digital currency bridge can interface with local fast payment systems and wholesale payment infrastructure, it can most directly alleviate the timeliness and traceability of cross-border wholesale settlements, as well as manage liquidity pressures for some large transactions. On this basis, a multi-center network of "Mainland West + Hong Kong + Singapore + Middle East" has the potential to gradually deepen the use of the renminbi in cross-border trade, investment, and certain consumption areas: Hong Kong and Singapore provide financial and clearing hub functions, the Middle East offers energy and bulk commodity trading scenarios, and the western corridor supports the pricing and settlement of renminbi in physical trade and logistics nodes, thus breaking through the traditional "coastal - offshore center" path dependency in breadth.

Dual Circulation

From the perspective of technological and business evolution, the digital renminbi was initially piloted in local retail payments in places like Shenzhen, primarily through distributing digital renminbi red envelopes to citizens and supporting over 5,000 merchants for offline scanning and online shopping, validating its usability and stability in high-frequency, small-value retail scenarios. Subsequently, applications gradually expanded to more complex prepaid consumption, public service payments, and corporate payments. In areas like Xiong'an New Area, it further entered the business settlement and fund management processes of large state-owned enterprises, such as using the digital renminbi for project payments and supply chain payments in the new area, marking its transition from "wallet + retail" to "account + corporate settlement." Briefing information indicates that cross-border linkage will significantly accelerate in the second half of 2025: around July, institutions like Chutianlong disclosed they are exploring digital currency bridge-related businesses; in August, Xiong'an New Area completed its first cross-border business related to the multilateral digital currency bridge; by November, China and the UAE launched a cooperation project known as JISR to strengthen collaboration in the digital currency bridge and payment settlement fields; and by December, this opinion elevated support for western provinces to participate in the multilateral central bank digital currency bridge to a policy direction. It can be seen that the large-scale pilot of domestic scenarios and cross-border bridging are advancing in parallel, forming a "dual circulation" structure: on one hand, domestically, sufficient user scale, merchant coverage, and corporate use cases are accumulated in places like Shenzhen and Xiong'an, enhancing network effects and technological maturity; on the other hand, through the mCBDC Bridge, these capabilities are connected to external nodes like Hong Kong, Singapore, and the Middle East, allowing the digital renminbi to build a solid foundation locally while gradually taking on more settlement and pricing roles in cross-border payments, thereby increasing its marginal substitutability and bargaining power against existing payment infrastructures.

Bull-Bear Game

In terms of public opinion, there is a clear divergence in the interpretation of this eCNY expansion and the digital currency bridge among KOLs. Some observers point out that the support from the central bank and eight departments for provinces along the route to participate in the multilateral central bank digital currency bridge and explore cross-border payment pilot projects with Singapore essentially promotes international cooperation in digital finance and improves cross-border payment efficiency, with the policy goal still focused on modernizing the payment and settlement system. However, some voices emphasize that as eCNY extends through projects like mBridge to regions such as the UAE, Hong Kong, Thailand, and Saudi Arabia, and explores cooperation with regional financial centers like Singapore, its presence in cross-border scenarios will inevitably increase, which in the long run may pose certain competition to crypto stable assets like USDT, with some viewpoints even directly stating that eCNY is expanding and creating a positive impact on USDT. The logic of the optimistic camp is that the actual landing of cross-border scenarios means the digital renminbi is moving from domestic retail to international wholesale, combined with the intensive emergence of policies and technological advancements in the second half of 2025, as well as currency cooperation with regions like the Middle East and Southeast Asia, which may gradually erode the advantages of the dollar and dollar-based stablecoins as "intermediary currencies" in certain trade settlements and capital flows. The more cautious camp, however, warns that the current coverage of the digital currency bridge project is limited in terms of countries and business scope, with landing scenarios more concentrated in specific pilot areas and specific types of corporate settlements, and that the short-term impact on the global dollar liquidity pattern and assets like USDT, which dominate in crypto exchanges and DeFi, is limited and lacks quantifiable evidence. Before there is broad participation from commercial banks and enterprises, coordination of regulatory rules, and truly complete technological interconnectivity, equating this progress directly with a "structural replacement" of the dollar and stablecoin systems carries a clear risk of overextension.

Capital and Sentiment

In terms of capital performance, current public information does not provide data on currency prices, transaction volumes, or capital flows directly related to this policy, making it impossible to quantify the rise or fall of a particular asset against this event based on factual foundations. Therefore, simply equating "the cross-border expansion of the digital renminbi" with "the short-term rise or correction of a certain currency" is neither rigorous nor easily misleading. In terms of public opinion structure, briefing information shows that current discussions are mainly concentrated in professional financial accounts and macro policy observer circles, with the overall sentiment in the community being relatively positive, more of a structural FOMO around the potential paths of digital renminbi internationalization and de-dollarization: participants are focused on the narrative of how the payment and settlement network may be restructured in the coming years, rather than on short-term market movements that can be directly arbitraged. Similar to past policy-driven messages, capital often undergoes a time-lagged process of "narrative amplification - project association - actual landing verification." Common market misconceptions during this process include: mechanically binding mBridge to certain specific crypto projects based on fragmented information, ignoring that official documents do not mention any specific Web3 networks or tokens; assuming that existing cross-border payment and dollar stablecoin roles will be rapidly and comprehensively replaced while the business is still in the pilot stage, leading to over-leveraged position configurations. For traders, a more rational approach is to view such policies as medium- to long-term background variables for assessing structural opportunities in the payment and settlement track, rather than as short-term price catalysts, avoiding emotional buying and selling in the absence of data support.

Outlook and Conditions

From a medium- to long-term perspective, the combination of the New Western Land-Sea Corridor and the multilateral central bank digital currency bridge represents a significant incremental variable in the path of cross-border application of the digital renminbi. On one end are the western inland areas represented by Chongqing, Guangxi, and Gansu, which open up trade routes with ASEAN, the Middle East, and Europe through land-sea intermodal transport; on the other end are external clearing and financial hubs represented by Hong Kong, Singapore, and Middle Eastern financial centers. The digital currency bridge connects these two ends, allowing the digital renminbi to take on more frequent pricing and settlement roles in cross-border businesses involving bulk commodities, manufactured goods, energy, and tourism services, thus opening new space for the depth and breadth of international use of the renminbi. Future verifiable indicators that need to be closely monitored include but are not limited to: whether the countries and regions participating in the multilateral central bank digital currency bridge continue to expand, whether new important trading partners or financial centers emerge; whether various official or institutional entities disclose more specific cross-border business scales, transaction numbers, and industry distributions; the extent to which the technical integration and standard convergence between mCBDC Bridge and existing regional fast payment systems and clearing systems have progressed, as well as the breadth of participation from commercial banks and multinational enterprises. Given the considerable uncertainty, it is more appropriate to adopt conditional judgments regarding its potential impact on crypto payment tools like USDT and the dollar settlement system: only when the economies covered by the digital currency bridge hold sufficient weight in global trade and capital flows, and the scale of cross-border business reaches a level that can influence the pricing systems of certain commodities and financial assets, while regulatory coordination mechanisms mature, technological interconnectivity is stable and usable, and market participants show a clear preference for the new system in terms of user experience and costs, can it potentially create substantial marginal impacts on dollar settlements and crypto stablecoins. Until then, it resembles an increasingly rich alternative option and pressure-testing scenario, which is a macro variable that needs to be continuously monitored but should not be preemptively bet on in the crypto market.

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