For nearly eight decades, the U.S. dollar has been the bedrock of global finance, a symbol of stability and trust, anchored by deep markets and the rule of law. However, as digital currencies rise, they offer new ways to transfer money across borders, faster, cheaper and increasingly outside traditional systems. The question now is: Who will set the rules for this new era?
On one side, China’s state-backed e-yuan aims to challenge the dollar’s dominance. On the other hand, dollar-backed stablecoins extend the dollar’s reach, keeping it relevant in a changing financial landscape. This is more than a technical debate. It is a financial chess match between the U.S. and China with enormous geopolitical stakes.
Digital yuan: hype or threat?
China is investing heavily in its central bank digital currency (CBDC), the e-CNY. As of June 2025, it has processed over $7.3 trillion in cumulative transactions and operates in more than 29 cities, according to the China Payments & E-Commerce 2025 report. The digital yuan is used for everything from public transit fares to salaries and retail purchases through platforms like Meituan and JD.com.
Despite these impressive figures and widespread adoption within China, some experts question its true potential to unseat the dollar globally. Digital finance researcher Alex de Vries, at the Vrije Universiteit Amsterdam, urges caution: “Despite the headlines, the adoption of e-CNY has been underwhelming. Most Chinese users still prefer WeChat Pay and Alipay and a 2025 study in Pacific-Basin Finance Journal showed little evidence of switching over. Given that, I wouldn’t expect these initiatives to drive international demand for the digital yuan.”
Still, China isn’t slowing down. It’s testing the e-yuan in commodity trading and linking it to the Belt and Road Initiative. China’s mBridge platform, developed in collaboration with Hong Kong, Thailand and the United Arab Emirates (UAE), aims to settle cross-border transactions in seconds at a fraction of the cost of traditional methods.
“China’s digital currency may be advancing under the Belt and Road Initiative,” digital financial services adviser David Birch puts it, “but it remains far from matching the depth, liquidity and trust embedded in the U.S. financial system.”
In June 2025, China opened an international e-CNY operations center in Shanghai, aiming to expand its global influence. Currently, most international transactions are conducted through SWIFT, a network largely dominated by Western institutions. If e-CNY gains traction, it could erode SWIFT’s role and shift financial influence.
China is also developing its own version of SWIFT, known as the Cross-Border Interbank Payment System. After watching how sanctions hit countries like Iran and Russia, others are seeing China’s model as a way to bypass Western control.
Caution or complacency?
While China pushes forward aggressively, the U.S. approach has been notably cautious, perhaps too cautious. The U.S. has yet to launch a digital dollar, as the Federal Reserve continues to evaluate the risks and benefits, with a primary focus on domestic improvements. Political challenges, such as President Donald Trump’s 2025 executive order against a U.S. CBDC, further complicate progress. Even before this, the U.S. was notably behind its competitors in digital currency development.
In the meantime, stablecoins like USDC and USDT have stepped in as a market-driven “digital dollar.” Unlike volatile cryptocurrencies, they are pegged to U.S. dollar reserves, effectively extending American monetary influence. The Clarity Act and GENIUS Act have strengthened their legal footing.
“These coins are not experimental,” says Birch. “Unlike volatile cryptocurrencies, stablecoins are backed by U.S. dollar reserves and are tied to real financial infrastructure. They are not Ponzi schemes; they represent liquidity and dollar power that China’s digital yuan cannot match.”
According to the World Economic Forum, stablecoin transfer volume in 2024 reached $27.6 trillion, surpassing the combined transaction volumes of Visa and Mastercard. According to a 2025 report, J.P. Morgan forecasted that the stablecoin market capitalization could reach $500 billion by 2028.
While stablecoins rise in popularity, they come with fewer regulations, which opens the door to criminal activity. De Vries adds, “Stablecoins may be rising, but we should look at who is using them. Many are privately issued with looser oversight – and already strongly linked to crime and fraud. A 2024 report by the International Compliance Association shows dollar-pegged stablecoins are a growing vector for illicit finance.”
What is at risk?
CBDCs, unlike stablecoins, are government-backed instruments that embed state power into the very architecture of money. They offer governments new tools to track transactions, set conditions and enforce standards.
For some, this raises a concern about privacy. European parliamentarians highlight that central banks, unlike private firms, lack a profit motive and wouldn’t sell data for commercial gain.
Birch adds, “CBDCs are not inherently surveillance tools – they can be anonymous or traceable depending on design. The key is democratic oversight, which is lacking in authoritarian regimes.”
If a government builds a CBDC to monitor everything, it gains a level of control that private coins can’t match. China’s early lead in this space could help it shape not just tech standards – but the rules of global finance itself.
Endgame for future money
Every cross-border transaction settled in e-CNY and every institution that joins China’s payment networks chips away at the dollar’s dominance and with it, the financial leverage behind U.S. sanctions, borrowing costs and global influence.
De Vries adds, “CBDC adoption may not be taking off yet, but that doesn’t mean the U.S. can afford to stand still. The rules of the digital money game are still being written, and the U.S. must assert its influence.”
The future financial landscape is likely to incorporate a mix of CBDCs, stablecoins and traditional currencies. But who gets to set the rules for that system depends on the choices the U.S. makes today. If the U.S. fails to lead in digital currency innovation, it may wake up to a world where the rules of money are written in Beijing, not Washington.
Birch concludes: “CBDCs and stablecoins serve different purposes. The U.S. must invest in both – not just for domestic convenience, but for global influence. This is not just about technology – it’s about who defines the rules of money for the future.”
