China’s cross-border payment system (CIPS 2.0) reportedly went into operation in 16 countries in Asia and the Middle East. Financial analyst Eric Yong shared details of what he describes as the opening salvo of the “bloodless currency war,” which could fundamentally challenge dollar hegemony.
According to Yeung, the system’s first transaction, the 120 million yuan ($16.5 million) payment for auto parts, was cleared from Shenzhen to Kuala Lumpur in just 7.2 seconds. This near-instant settlement is in stark contrast to Swift’s traditional three-day processing cycle.
**The Final Showdown between China and the US: Battlefield transitions from military hegemony to global currency war**
As the clock was hit at 3am on Wall Street, the Swiss bank clearing system suddenly flashed a red warning.
– Eric Yun (where 9888S) April
The use of digital euan is intended to address three fundamental issues regarding the current dollar-based payment system. First, reduce costs. Yeung explained using Swift to cross-border payments between countries at $100,000, costing $4,950 (4.95%), which took three days to process. The same payment using CIPS 2.0 reported an expense of $0.12 and was processed instantly.
This represents a 90% reduction in the cost of cross-border trade payments. Second, the system is said to offer technology benefits besides speed. As Yeung said, Singapore-based DBS Bank has tested the “dual offline payment” feature of Digital Euan, which allows transactions to be performed without internet access.
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Additionally, the use of smart contract technology is said to allow automatic payments when goods reach ports. Third, Yeung writes about the UAE Central Bank case in which the system’s records tracked money laundering attempts through 16 accounts. AI control prevented suspicious transactions in 0.3 seconds.
This is said to require manual screening of 85% of cross-border money laundering attempts, unlike the usual Swift process. The impact may be very meaningful. Yeung has made clear that ASEAN members have prepared a blueprint for using digital euan for 90% of their trade by 2025, and Indonesia has put the currency on its list of foreign exchange reserves. Most notably, Saudi Arabico reportedly cites 65% of its crude oil contract with digital Original Sinopec.
The western financial centres seem to be in a hurry to catch up. According to Yong, the city of London has launched a “Digital Pound Accelerator,” but Bank of England officials have allegedly admitted it was “at least two or three years behind China.” This technical gap could prove difficult to close, especially as China manages a significant portion of the world’s rare earth purification (78%) and neodymium magnet production (85%).
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Yeung concludes by framing this development not only as a currency competition, but as a change in financial civilization. Citing Nobel Economist Stiglitz, he suggests that digital yuans not only replace the dollar, but also “redefine the dimension of financial civilization” by changing cross-border payments from “exclusive courier for the elite” to “instant messaging for all.”
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