The circulation of the Digital Yuan 2.0 in 2025 is changing the way money works in Asia. This technology connects the People’s Bank of China directly with the cross-border payment network of ASEAN (Association of Southeast Asian Nations), speeding up transactions compared to older systems like SWIFT, which require 3 to 5 days. Beijing is developing the foundation of a regional financial infrastructure that accelerates the settlement of transactions, while simultaneously reducing dependence on the US dollar.
According to reports from the Yuan Adoption Tracker, as reported by Modern Diplomacy, the first quarter of 2025 saw a significant increase in the use of the Renminbi for international trade settlements, while its share in the global foreign exchange market continued to rise. This shows that the e-CNY is no longer a simple internal test in China, but part of a broader Chinese strategy to internationalize its currency. This trend aligns with the global de-dollarization process.
China is leveraging the competition with the US to expand the use of the e-CNY in Asia. Analysts point out that 2025 is a critical year for strengthening the power of the digital yuan outside China, especially in the retail sector of Hong Kong and beyond the borders of ASEAN. The Digital Yuan creates a strategic dilemma for ASEAN: should it prioritize the efficiency of transactions or its monetary sovereignty?
The integration of the e-CNY offers speed and low cost, but increased Chinese influence on cross-border payment systems may restrict the monetary policy options of the region's central banks. The participation of Thailand in the m-CBDC project, Indonesia's initiative for the Digital Rupiah, and Vietnam's stricter regulations on cryptocurrencies show that the reactions of Southeast Asian countries are not homogeneous towards the penetration of Chinese financial technology.
China's strategic intention
Since 2020, China has never considered the e-CNY as a purely domestic technological achievement. Through bilateral and multilateral trade relations, it aggressively promotes the adoption of the Digital Yuan as a means of cross-border payments in ASEAN. According to analysis by China Crunch, e-CNY cross-border transactions in ASEAN exceeded 500 billion yuan in the first nine months of 2025, suggesting that the e-CNY is evolving into a popular alternative system to SWIFT.
For Beijing, the dominance of the dollar constitutes a geopolitical vulnerability. By promoting the e-CNY, it attempts to build a parallel financial system that reduces global dependence on the dollar. This strategy is in harmony with the aspirations of Russia and other BRICS countries. The Observer Research Foundation predicts that 2025 will mark a more aggressive international expansion of the e-CNY, particularly in Hong Kong and outside ASEAN.
Beyond the technical aspects, the Digital Yuan strengthens China's "soft power." By integrating ASEAN into the e-CNY ecosystem, Beijing becomes a rule-setter. Countries that use the Chinese digital currency will find it difficult to oppose China's political or economic initiatives. Concurrently, China is promoting the mBridge project along with Hong Kong, Thailand, and the UAE. The initiative examines the speed and efficiency of cross-border transactions through CBDC and strengthens the region's financial cohesion. Through mBridge, Beijing is not just offering technology but is laying the foundations for a new payment system that serves as an alternative to Western structures.
ASEAN's dilemma
Each ASEAN country addresses the issue differently.
Τhailand seeks to reduce the cost of cross-border remittances and strengthen financial integration.
Indonesia only permits the Digital Rupiah as a legal means of digital payments, emphasizing the priority of maintaining its monetary sovereignty.
Vietnam focuses on regulating the domestic cryptocurrency market, which it views more as an investment tool than a transactional one, according to PwC.
Singapore, through the BLOOM project, utilizes tokenization and stablecoins for cross-border payments, maintaining flexibility and preventing the dominance of a single currency.
The integration of the e-CNY may restrict the monetary policy options of ASEAN central banks. The IMF warns that cross-border digital payments, if not properly regulated, can cause capital flight and monetary instability. Increased efficiency implies potential losses in monetary autonomy. Accepting the e-CNY would enhance the efficiency of the payment system but would increase dependence on China. Rejecting it would safeguard sovereignty, but might place the region outside the developments of the global digital economy.
Long-term risks
The widespread use of the digital yuan in the ASEAN payment system may complicate the formulation of monetary policy. Central banks that currently control liquidity and policy tools will face new challenges when a significant portion of cross-border flows occurs in e-CNY. Weaker economies, such as East Timor, Laos, and Cambodia, risk further losing the ability to conduct independent fiscal and monetary policy, given their high dependence on Chinese trade.
The Digital Yuan is a data-driven payment system, allowing Chinese authorities to record cross-border transactions in real time. The Atlantic Council CBDC Tracker points out that the e-CNY provides regulators with tools for direct monitoring of money flows. This has led to concerns that Beijing could utilize this data as a means of political influence. Although the simplification of transactions makes the e-CNY attractive, its mass adoption may lead to structural dependence. Economies that become overly reliant on the Chinese payment system will find it difficult to diversify their trade and maintain their economic independence. The rapid spread of the e-CNY in Hong Kong and beyond ASEAN indicates Beijing's intention to establish the Renminbi as the region's dominant currency.
Political implications
ASEAN needs to develop a Digital Payment Hub as a framework for regional integration. Such a structure would reduce the risk of unilateral dependence on the e-CNY and strengthen the interoperability of central banks. Coordination in CBDC development can prevent the fragmentation of the global payment system and maintain the region's monetary stability.
The Digital Yuan carries risks of financial surveillance. ASEAN must strengthen KYC, AML, and CFT frameworks. Strong regulation of fintech and CBDCs is crucial for protecting state sovereignty from excessive external influence.
Indonesia, with the Digital Rupiah, and Vietnam, with its focus on cryptocurrency regulation, are examples of a strategic offset that maintains policy space.
ASEAN must encourage the development of domestic digital currencies as a "shield" against external dominance. For smaller countries, the formation of alternative monetary tools is key to maintaining economic autonomy.
Furthermore, ASEAN must act as a unified bloc in international forums such as the G20 and the IMF to shape global standards for CBDCs. Collective bargaining strengthens its position against major powers and protects regional stability.
Global innovation
The digital yuan has evolved from a technological innovation into a geopolitical tool that challenges the global monetary architecture. Its presence in Southeast Asia places ASEAN before a difficult dilemma: accepting the efficiency offered by Beijing or safeguarding its monetary sovereignty through a regional alternative solution. The long-term risks are significant.
The integration of the e-CNY can restrict the space for monetary policy, open the way for financial surveillance by Beijing, and create structural dependencies that undermine the political and economic autonomy of ASEAN countries. The heterogeneity of reactions intensifies the region's vulnerability to external pressures.
For this reason, ASEAN must formulate a collective strategy: a regional CBDC framework, diversification of economic partners, strengthening of regulatory mechanisms, and coordination in international institutions. Without such steps, Southeast Asia risks being transformed into a battleground for major powers, instead of an autonomous determinant of its financial future.
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