Tencent Pilots Digital Yuan for Cross-Border Trading with Mbridge

Tencent, the Chinese tech giant, is participating in the testing phase of Mbridge, a CBDC-enabled cross-border settlement platform. This collaboration, involving Tencent’s Tenpay, marks a significant step in using the digital yuan for international e-commerce settlements.

Tencent, a leading Chinese tech conglomerate, took part in the pilot test of Mbridge. This platform facilitates cross-border settlements using central bank digital currencies (CBDCs). Through its international settlements arm, Tenpay, Tencent tested the feasibility of using China’s digital yuan for settling e-commerce payments.

Before Mbridge’s minimum viable product (MVP) release, Tencent cleared e-commerce exports using Mbridge’s rails and the digital yuan. This early involvement underscores Tencent’s commitment to advancing digital currency applications in global trade.

Expanding the Digital Yuan’s Reach

Mbridge includes participation from the Bank of Thailand, Central Bank of the United Arab Emirates, People’s Bank of China (PBOC), Hong Kong Monetary Authority (HKMA), and the Saudi Central Bank. While other nations are exploring linking their real-time payment systems to Mbridge, China has already integrated its CBDC into this decentralized network, enabling settlements using the digital yuan.

Tencent, an early participant in the digital yuan pilot, has shown significant interest in these initiatives. In March 2023, Tencent’s messaging app, WeChat, began supporting digital yuan payments, allowing over 1.2 billion users to make retail transactions using the digital currency. Additionally, Tencent’s private bank, Webank, was one of the first private institutions involved in the pilot, following the onboarding of Chinese state banks.

The Bank of International Settlements (BIS) is involved in the Mbridge project, which has raised concerns among Western observers. They worry about the potential use of this decentralized system to circumvent economic sanctions typically enforced through traditional settlement mechanisms like SWIFT.