China’s central bank is positioning the digital yuan to enhance cross-border payments with Portuguese-speaking nations, with Lu Lei, vice governor of the People’s Bank of China (PBC), saying that the currency offers a payment method that is “safer” and more effective.

The statement was made at a seminar on central bank digital currencies and cross-border applications held in Macao and organised by the Monetary Authority of Macao. According to the Portuguese news agency Lusa, the seminar’s objective was to explore digital currency applications and deepen financial cooperation between China and Portuguese-speaking markets.

The PBC official highlighted Macao’s role as a crucial connecting platform, arguing that new digital infrastructure could overcome the high costs and low efficiency currently plaguing international payments. This strategy is further supported by Macao’s own development of the digital pataca, which is set to function as legal digital tender alongside physical cash. 

Lusa reports that the Monetary Authority of Macao recently joined the mBridge pilot project, a multilateral digital currency platform involving central banks across Asia and the Middle East. Lu expressed hope that linking the digital pataca with the mBridge platform will facilitate closer cooperation with Portuguese-speaking countries.

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The digital yuan, which is the world’s first state-backed digital currency, began development in 2014, with technical trials launching in various cities starting in 2019. Director of the PBC’s Digital Currency Research Institute, Mu Changchun, explained that the digital yuan originated as a modern digital substitute for physical cash, intended to strengthen monetary sovereignty and modernise the payment system.

Currently, the digital yuan operates with an ecosystem capable of supporting online and offline payments, smart contracts, and greater regulatory transparency. Lu noted that the currency presented an innovative solution for the global monetary system’s development.

The central bank is actively intensifying its efforts to expand the digital yuan’s usage both domestically and internationally, providing banks with direct guidance and incentives, Lusa says. 

A cross-border transfer service project using the digital yuan is already operational, streamlining international bilateral payments. Mu Changchun detailed that this service enables foreign financial institutions to connect via a single platform, providing 24-hour digital payment services.