Will the Digital Yuan Dethrone the U.S. Dollar?
The U.S. dollar has been the undisputed king of global trade for decades. Even when two countries trade goods with no American involvement, the deal is usually priced and settled in dollars. But a quiet shift is underway — and it’s coming from Beijing.
China’s digital yuan (e-CNY), paired with its Cross-Border Interbank Payment System (CIPS), is being rolled out far beyond China’s borders. Recent moves in Africa are turning heads:
Tariff-free access: At the June 2025 Forum on China–Africa Cooperation meeting in Changsha, China announced zero tariffs for exports from 53 African countries.
Bank integration: Afreximbank and South Africa’s Standard Bank are now direct CIPS participants, meaning they can send and receive yuan payments without using U.S. or European intermediaries.
Pilot projects: Chinese firms have already used the digital yuan to settle large commodity trades — bypassing both SWIFT and the U.S. dollar entirely.
Why does this matter? Because every trade settled in yuan instead of dollars weakens the dollar’s network effect. Right now, about 84% of cross-border trade touches the U.S. dollar. If enough countries start trading in yuan — especially in resource-rich regions like Africa — that share could drop significantly over the next decade.
The shift won’t topple the dollar overnight. The greenback still dominates central bank reserves and remains the deepest, most trusted currency market. But what’s happening with the digital yuan in Africa is part of a much larger, coordinated effort by China (and its partners) to build a multipolar currency system where the U.S. dollar is no longer the automatic choice.
It’s not the end of dollar dominance yet — but it might be the beginning of the end of its monopoly.
