jakiro
Authors: Ren Yiying, Wang Jian, Zhu Yifan, Zhang Xuzheng, Source: “International Finance”
summary
At present, the global cross-border payment system is highly dependent on the “SWIFT+CHIPS” architecture, and has problems such as low efficiency, weak supervision and “weaponization” of politics.Against this background, the mBridge project jointly promoted by multilateral central banks and the privately-led stablecoin scheme have become two major innovation paths for parallel evolution.The former relies on the central bank’s credit and distributed ledger technology to build a cross-border CBDC point-to-point real-time settlement network; the latter realizes cost compression and quasi-instant clearing of high-frequency and small-value payment scenarios through public chains.This paper systematically sorts out the technical architecture, governance model and application scenarios of the two, revealing their complementary relationship between sovereignty and compliance and market efficiency.Research has found that the cross-border payment system may present a “dual-track parallel” pattern in the future: mBridge strengthens official settlement infrastructure, and stablecoins fill the gap in inclusive finance.The coordinated development of the two will promote the evolution of the global payment system toward more efficient and decentralized directions.
Keywords: Cross-border payment; mBridge; CBDC; stablecoin; SWIFT system
The core support of the current global cross-border payment system is a two-layer architecture composed of “SWIFT+CHIPS” (Global Banking Finance and Telecommunications Association + New York Clearing House Interbank Payment System).As a global interbank message communication system, SWIFT mainly undertakes information transmission functions, and fund liquidation is completed through CHIPS.Since local U.S. banks can directly open accounts at the Federal Reserve Bank of New York for settlement, while non-US banks must indirectly access the CHIPS system through their proxy banks in the United States, this model forms a multi-level and multi-link proxy bank model, resulting in high cross-border payment costs, lagging timeliness, and limited regulatory efficiency.
In recent years, the United States has repeatedly imposed sanctions on other countries with the help of SWIFT and CHIPS, making the political risks of the cross-border payment system increasingly prominent, and the exploration of alternative mechanisms worldwide has become increasingly urgent.Against this background, the “mBridge” (mBridge) with the central bank digital currency (CBDC) as the core and the “blockchain stablecoin” issued by the private sector have become two paths of parallel evolution.The former is a CBDC cross-border clearing network constructed by the Bank for International Settlements (BIS) coordinated with various central banks. By building a general platform based on distributed ledger technology, it supports multiple central banks to directly issue and exchange their respective CBDCs for cross-border payment settlement (Song Shuang, 2024); the latter is an on-chain stablecoin issued by the private sector, which is usually fully collateralized with assets such as fiat currency and treasury bonds, and builds a decentralized cross-border payment network based on public blockchains, and bypasses traditional financial intermediaries through technical means (Lu Minfeng et al., 2025).Although the two have significant differences in technical architecture, governance logic and applicable scenarios, they are both aimed at solving the structural bottlenecks in traditional systems.
Based on systematically sorting out the operating mechanisms and bottlenecks of the traditional payment system, this paper evaluates the development principles, technical architecture and application trends of the two paths of mBridge and stablecoin, further compares its institutional advantages and potential risks, and puts forward policy suggestions for the construction of my country’s cross-border payment system.
01The innovation driving force of the global cross-border payment system
At present, the “SWIFT+CHIPS” system that global cross-border payments mainly rely on has the characteristics of highly centralized, US dollar-based, and complex hierarchical characteristics. There are mainly three problems: First, inefficient and high costs.The traditional proxy bank model needs to go through multiple nodes such as initiating lines, intermediate lines, and receiving lines, and cooperate with different time zones, regulations and systems, resulting in an average cross-border remittance taking 3-5 working days.In addition, fees may be charged in each link, and foreign exchange exchange is also accompanied by price difference loss, making the overall transaction cost too high (Xue Xinhong et al., 2024), which is particularly unfavorable to micro-payment and users in developing countries.Second, the risk of severing regulatory information and expanding compliance.As SWIFT transmits information flow, the capital flow is transferred through the account to form a misalignment chain.
It is difficult for regulators to fully grasp transaction status and funding paths in real-time dimensions, and anti-money laundering and anti-terrorist financing compliance reviews face huge challenges.Third, the system is easily instrumented by geopoliticals.SWIFT neutrality is questioned.Historically, the United States has repeatedly used its influence on SWIFT and CHIPS systems to impose financial sanctions on other countries, such as removing multiple Iranian banks from the SWIFT system to cause a major blow to the Iranian economy; after the outbreak of the Russian-Ukrainian conflict in 2022, the connection between some Russian banks and SWIFT was cut off.
02mBridge: The central bank-led digital currency bridge path
(I) Technical structure, mechanism principles and development significance
As the world’s first multilateral central bank digital currency cross-border payment platform, mBridge has built a new paradigm of efficient, low-cost and secure cross-border payment through the integration and innovation of distributed ledger technology (DLT) and CBDC.Its core principle is to use distributed ledger technology and the characteristics of CBDC to build a decentralized cross-border payment network.In this network, central banks or monetary authorities of various countries and regions participate in the form of nodes to jointly maintain a synchronous and real-time updated ledger. By recording each cross-border payment transaction in digital form on the blockchain, ensuring the immutability, transparency and traceability of the transaction.Specifically, the mBridge platform connects the digital currency systems of central banks or monetary authorities in various countries and regions through the design of a “corridor network”.When making cross-border payments, commercial banks first exchange their own country or regional CBDCs into depositary receipts (DRs) on the platform, and then realize point-to-point transfer and settlement through blockchain technology.The entire process bypasses multiple proxy banking links in traditional cross-border payments, significantly shortening the transaction process, reducing transaction costs and time delays, and improving transaction transparency and security.
The mBridge project follows the three principles of “losslessness, compliance, and interoperability”. On the premise of ensuring that the monetary sovereignty of each country and region is not violated, it meets the differentiated requirements of each country and region through an embedded regulatory module, and achieves seamless connection between different CBDC systems.These principles lay the foundation for the stable operation and wide acceptance of mBridge, allowing it to play an important role in the complex international financial environment.
mBridge is of great significance to the internationalization of the RMB.Through the mBridge platform, digital RMB can be more conveniently circulated and settled across borders, expand its scope of use and market share in international payments, and enhance the international status and influence of RMB.For example, under the framework of the Belt and Road Initiative, China provides DLT infrastructure to developing countries such as Bangladesh and Egypt, and uses technical assistance to exchange for its increase in the proportion of RMB reserves.At the same time, mBridge also provides a platform for cooperation and exchange for CBDCs in other countries and regions, promotes the diversification and balanced development of the global monetary system, and becomes a test field for international monetary system reform.
(II) Project progress and application results
As one of the world’s largest CBDC cross-border payment pilot projects, the mBridge project has achieved breakthrough progress from concept to implementation at home and abroad.Internationally, in 2022, the mBridge project completed the first international pilot test based on real trading scenarios, and completed a total of 164 cross-border payments and foreign exchange simultaneous settlement, with a settlement amount equivalent to more than RMB 150 million.The Saudi Central Bank became a comprehensive partner of the mBridge project in June 2024, and launched RMB oil settlement in September of the same year, marking a new stage of digital currency-driven energy trade pricing system.These projects validate mBridge’s potential in improving cross-border payment efficiency and reducing costs, demonstrating its feasibility and advantages in practical applications.
In China, mBridge is implemented in Wenzhou, Huzhou, Foshan, Guangdong, Guangxi and other places, handling cross-border RMB foreign exchange collection business for enterprises.Through the mBridge platform, the cross-border transaction time of enterprises has been greatly shortened. The remittances that originally required 24 hours to be received can now be received within 1 hour. SWIFT telecommunications fees and agency bank handling fees can also be avoided, which greatly improves the efficiency of cross-border payments, reduces the transaction costs and exchange risks of enterprises, and provides more convenient and efficient payment services for cross-border trade and investment, becoming an important scenario carrier for RMB internationalization.
(III) Regulatory Challenges and Solutions
As an innovative cross-border payment infrastructure, mBridge faces the following challenges for its further application and promotion worldwide: First, the core of mBridge lies in connecting CBDC systems based on different technical architectures in different countries and regions, and ensuring seamless, secure and efficient interaction between these heterogeneous systems is difficult.Technical failures or upgrades from either party may affect the stability of the entire network.Second, mBridge involves central banks or monetary authorities and regulatory agencies in many countries and regions, and it is difficult to establish an efficient, fair and widely accepted governance framework in terms of decision-making mechanisms, access standards, cost sharing, etc.Central banks or monetary authorities in various countries and regions have significant differences in CBDC design, data privacy, anti-money laundering and anti-terrorist financing, capital flow management, etc., and it takes a lot of manpower, material resources and time costs to reconcile many aspects.Third, mBridge provides nearly real-time cross-border settlement, which may accelerate capital flows and have an amplification effect on exchange rate and financial market fluctuations.During periods of stress, rapid capital flight may aggravate financial instability, and the connection friction with the traditional financial system may also create new systemic risk points.
Achieving the robust development of mBridge requires systematic solutions and international collaborative governance.On the one hand, mBridge will continue to strengthen its docking with other international payment systems and standards to improve its interoperability and compatibility.For example, mBridge can be interconnected with traditional payment networks such as SWIFT system and CIPS system, build a dual-track infrastructure of “traditional + digital currency”, form a complementary effect, and jointly promote the optimization and upgrading of the global cross-border payment system.On the other hand, mBridge will promote central banks or monetary authorities in various countries and regions to further improve the regulatory framework of CBDC, strengthen international cooperation and coordination, and establish a more unified, transparent and efficient cross-border payment supervision system.This will help prevent financial risks, maintain financial stability, and provide solid regulatory guarantees for the healthy development of mBridge.
03Stablecoin: a technology alternative driven by market efficiency
(I) Definition, operating mechanism and competitive advantages
Stable currency is an innovative monetary system design. It is different from traditional fiat currency and is essentially different from cryptocurrencies with extremely volatile volatility. On the contrary, it has the dual characteristics of the stability of the value of traditional fiat currency and the advantages of cryptocurrency technology in terms of currency attributes.The core mechanism of stablecoins can be summarized as: issuanced by the private sector and reserved with 100% of real assets, which can be a single domestic or foreign fiat currency, or a diversified portfolio of financial assets such as government bonds, precious metals and even other cryptocurrencies.At the technical level, rely on DLT to build an issuance and circulation system to ensure the transparency, tamper-freeness and decentralized characteristics of its transactions.Taking the Hong Kong stablecoin regulatory framework as an example, its institutional design is typical.As a private entity, the issuer must reserve high-liquidity real assets of equivalent value to support the issuance of stablecoins, such as Hong Kong dollar deposits, foreign exchange reserves or AAA bonds, and accepts a periodic verification of the reserve adequacy ratio by third-party auditors.
This design ensures that every stablecoin has reserves of real assets, and holders of stablecoin can redeem their reserve assets at any time, effectively preventing the risk of excessive currency issuance.When reserve assets are legal tender, stablecoins essentially become a digital extension of legal tender, and their credit rating is approaching sovereign currency.At the same time, due to the characteristics of distributed ledgers, stablecoin transactions have limited anonymity, that is, ordinary users’ transaction information is protected by encryption, and regulators can obtain specific transaction traceability data through legal authorization, which not only protects the privacy of market entities, but also provides the necessary supervision means for judicial and regulatory agencies.In addition, the peer-to-peer transaction characteristics of distributed ledgers make stablecoins naturally have the advantages of cross-border payments, which can break through traditional border restrictions and provide low-friction solutions for the international payment system.
(II) Development history and risk events
The birth of stablecoins aims to resolve the structural contradiction between crypto asset price fluctuations and monetary functions, and become a bridge connecting traditional finance and crypto finance.As the first stablecoin, USDT launched by Tether in 2014 adopts a US dollar asset reserve mechanism to achieve 1:1 anchoring with US dollar and running on the blockchain.With cryptocurrency
Market development, as of June 30, 2025, USDT’s market value reached US$157.74 billion, accounting for about 62% of the global stablecoin market, becoming the most important medium of cryptocurrency trading.Its application scenarios have also expanded from crypto transactions to the traditional financial field, and have been accepted by more and more financial institutions and enterprises as cross-border payment tools.The reserve asset structure has also undergone diversified evolution from a single dollar to crypto assets, gold, corporate bonds, etc., which not only improves risk resistance, but also reflects the market’s concerns about the depreciation of fiat currencies.
As a natural cross-border payment tool, stablecoins have broken through the geographical restrictions of traditional payment systems with their decentralized characteristics, and achieved cross-border circulation at lower cost and higher efficiency, especially providing convenient payment and savings solutions for residents in areas with weak financial infrastructure.However, World Bank data shows that 23% of cross-border flows of stablecoins are not included in the balance of payments statistics, posing challenges to national and regional monetary sovereignty and capital controls.At the same time, although the diversification of reserve assets enhances stability, it brings new risks – in 2022, TerraUSD’s market value collapsed due to algorithm failure, exposing the system fragility of stablecoins without sufficient asset support.
(III) Regulatory Challenges and Solutions
As an emerging financial tool, stablecoins have shown huge development potential with the advancement of blockchain technology and the growth of market demand for digital currencies.Its decentralized and efficient nature makes it hope to become a strong competitor to the traditional payment system in the global financial system, especially in the field of cross-border payments.However, to transform this potential into reality and ensure its long-term healthy development, stablecoins must overcome three core challenges: first, value stability and asset security issues, including inconsistent reserve asset management standards, technical loopholes and cyber attack risks; second, regulatory complexity brought by cross-border circulation, such as difficulties in international regulatory coordination and potential risks of illegal activities; third, potential impact on the traditional financial system, including weakening bank credit capabilities, and market fluctuations transmitted to the traditional financial field.
In the face of the above challenges, we need to find a balance between innovation and safety, efficiency and stability.First, regulators should build a comprehensive stablecoin regulatory system, including strict qualification review of issuers and strengthening reserve assets supervision (such as regular independent audits and transparent disclosure).Secondly, given the cross-border nature of stablecoins, international regulatory cooperation must be strengthened, unified standards must be formulated through international organizations, and cross-border information sharing and joint risk prevention mechanisms must be established.Finally, policy formulation needs to take into account innovation incentives and risk prevention and control, for example, to support technology research and development through regulatory sandboxes, while strengthening consumer protection and risk education.Through this comprehensive path, stablecoins can overcome current obstacles and achieve steady development in the global financial system.
04The competition between currency bridge and stablecoin
mBridge and stablecoins represent the dual-track evolution of “sovereign path” and “market path”, forming a distinct “competition and compliance pattern” in the field of cross-border payments.
On the one hand, the difference between its technology and institutional logic (see Table 1) constitutes the basis of competition.Stablecoins are based on public chains, smart contracts and open financial ecosystems, and have low threshold access and high programmability. They are more suitable for high-frequency and fragmented retail payment scenarios, such as cross-border remittances and e-commerce settlements, but their decentralized characteristics may weaken monetary sovereignty and regulatory transparency.In contrast, mBridge relies on the central bank’s digital currency (CBDC) framework and emphasizes regulatory compliance and financial stability. At this stage, it is mainly used in large-scale and wholesale-level cross-border clearing. Although it reduces systemic risks, it has weak flexibility.This scenario differentiation makes the two have potential substitution effects at multiple payment levels, especially in emerging markets with limited resources. The trade-offs on access costs, sovereign control and liquidity efficiency between the two constitute a “one increase or the other decrease” trend.
On the other hand, ecological complementarity and functional differentiation bring about space for cooperation.The functional positioning of the two is naturally complementary. Stablecoins focus on high-frequency demands on the retail end, such as personal remittances and small payments; mBridge serves large-scale liquidation on the wholesale end, such as inter-central bank reserve allocation and multinational corporate settlement.This scenario hierarchy allows the two to develop together at different payment levels rather than completely replace them.With the gradual compliance of stablecoins and the expansion of mBridge application scenarios, the cooperation potential of the two parties in liquidity support, technical interoperability, etc. may be further revealed, jointly promoting the formation of a more efficient cross-border payment system.
05Policy construction on the construction of my country’s cross-border payment systemDiscussion
First, deepen the construction of the main channels for cross-border application of digital RMB.We should focus on promoting the application of digital RMB on the mBridge platform and strengthening its trade settlement function in countries and regions jointly building the “Belt and Road” and especially the RCEP region.By improving supporting policy support, more international financial institutions will be promoted to access the mBridge system and build a cross-border payment network with digital RMB as the core.At the same time, combined with bilateral local currency swap and other mechanisms, the proportion of RMB used in the international payment system will be increased.
The second is to standardize the development of stablecoins in Hong Kong.Relying on Hong Kong’s status as an international financial center and the regulatory framework of the “Stablecoin Ordinance”, licensed financial institutions will be supported to pilot the issuance of stablecoins under the premise of controllable risks, and will be given priority to small and high-frequency payment scenarios such as cross-border e-commerce and labor remittances.At the same time, strengthen supervision coordination with the mainland to ensure that capital flows meet foreign exchange management requirements, and improve supporting supervision mechanisms such as anti-money laundering and cross-border data flows.
The third is to steadily promote the coordinated development of the cross-border payment system.Taking the digital RMB cross-border payment system (mBridge) as the core infrastructure, we will coordinate the development of multiple payment methods and build a layered and classified cross-border payment ecosystem.Support commercial banks to carry out cross-border payment innovation in digital RMB in accordance with the law and regulations under the guidance of the central bank, and provide differentiated service solutions for transactions of different scales.Strengthen cross-border payment supervision coordination and improve risk monitoring and compliance management framesto ensure the safe and efficient operation of the payment system.
