Geopolitics & CBDCs

Geopolitics & CBDCs: How the US-China Rivalry is Shaping the Future of Money

The rise of CBDCs (Central Bank Digital Currencies) isn’t just about finance—it’s becoming a geopolitical battleground, especially between the US and China. Here’s how global power struggles are influencing CBDC adoption and the broader fight for control over cross-border payments.

1. The CBDC Race: US vs. China

China’s Aggressive Push (Digital Yuan - e-CNY)

• Status: World’s most advanced CBDC (pilots in 26 cities, $250B+ processed).

• Goals:

  • Reduce reliance on the US dollar (de-dollarization).

  • Bypass SWIFT with systems like mBridge (with UAE, Thailand, Hong Kong).

  • Export financial influence (e.g., Belt & Road Initiative countries).

• Tactics:

  • Forcing adoption: Some Chinese firms must use e-CNY for salaries.

  • mBridge as a SWIFT rival: A CBDC-based alternative for global trade.

US Approach (Digital Dollar - Slow & Cautious)

• Status: Still in research phase (no pilot yet).

• Why the Delay?

  • Political divisions (Republicans wary of "government-controlled money").

  • Bank lobbying (fears of disrupting commercial banks).

  • Privacy concerns (CBDCs could enable surveillance).

• But the US is waking up:

  • FedNow (2023) = A step toward faster payments, but not a CBDC.

  • Project Hamilton (MIT/Fed) = Exploring tech for a digital dollar.

Implications

• China is winning the CBDC race—for now.

• If the US doesn’t act, mBridge could dominate global trade.

2. How This Affects SWIFT, Ripple, and Global Finance

Scenario 1: China Dominates CBDCs (US Lags)

• mBridge becomes the new SWIFT for Asia, Africa, and BRICS nations.

• Ripple’s role shrinks in China-aligned markets (replaced by e-CNY).

• SWIFT declines but stays relevant for USD/EUR transactions.

Scenario 2: US Launches a Digital Dollar

• A "Digital Dollar SWIFT" emerges (Fed + EU/Japan collaboration).

• Ripple benefits as a bridge between CBDCs and legacy systems.

• mBridge faces competition but remains strong in authoritarian states.

Scenario 3: Fragmented System (No Clear Winner)

• Multiple CBDC networks (US/EU vs. China/Russia vs. Ripple for neutrals).

• Banks juggle all three (SWIFT + mBridge + RippleNet).

• Chaos for global trade (liquidity silos, inefficiencies).

3. The New Cold War: Digital Currency Edition

• China’s Strategy: Use CBDCs to weaken US financial dominance.

• US Counterplay:

  • Sanctions pressure (e.g., banning mBridge-connected banks from USD markets).

  • Alliances (G7 CBDC standards to counter China).

• Wildcard: BRICS CBDC

  • If Brazil, Russia, India, China, and South Africa launch a BRICS CBDC, it could rival both USD and mBridge.

4. What This Means for Banks & Businesses

• Multinationals may need to support multiple CBDCs + SWIFT + Ripple.

• Banks in neutral countries (e.g., UAE, Singapore) will hedge bets.

• Ripple’s survival depends on being neutral tech (not aligned with US or China).

Final Verdict: The CBDC Wars Have Begun

• China is ahead, using CBDCs as a geopolitical weapon.

• The US is behind, but the digital dollar could still catch up.

• Ripple must adapt to avoid being squeezed out.

• SWIFT’s future depends on whether the West unites around a CBDC alternative.

Bitcoin? The only neutral, apolitical money—likely to gain value as CBDC tensions rise.