1
Xicheng District, Beijing. An annex building two blocks from the main headquarters of the People's Bank of China (PBOC).
The procedure begins at the entrance. You present your ID at the visitor pass window; the clerk behind the glass matches it to your face, confirms the purpose of your visit and the person you are meeting, then hands over a plastic card. Your name and the date and time of your visit are printed on the front; a barcode on the back. After passing through the metal detector, a security officer confiscates your mobile phone. Powered-off handsets are lined up side by side in plastic dividers. Each divider is numbered, and you receive a paper chit with the corresponding number. The process is as businesslike as a dry-cleaning receipt. Beyond the checkpoint, a corridor stretches ahead. There are no windows. Fluorescent light spreads evenly across the linoleum floor. Footsteps are absorbed into the surface, making the space unnervingly quiet. The walls are bare of decoration; only CCTV cameras hang from ceiling corners at regular intervals. The floor you reach by elevator has no publicly listed name. The Digital Currency Research Institute (Shuzi Huobi Yanjiusuo). This is where the People's Bank of China builds and runs the e-CNY.
A large monitor hangs on the far wall of the office. The dashboard updates in real time.
Cumulative transactions: 3.48 billion. Active wallets: 2.25 billion. Pilot regions: 26 cities across 17 provincial-level jurisdictions. Cumulative transaction value: 16.7 trillion yuan.
By the numbers alone, it is a success. No other central bank digital currency (CBDC) in the world comes close to this scale. Since the PBOC expanded its pilot regions in April 2022, the e-CNY has spread to Tianjin, Chongqing, Guangzhou, and Zhejiang, and by 2025 it had begun establishing itself as a pillar of everyday payments. Wallet numbers increased twelvefold compared to July 2024. Public transit fares, pension disbursements, school tuition, tax payments — it was becoming difficult to find a public service that the e-CNY had not penetrated. On January 1, 2026, interest began accruing on small-balance wallets — the world's first interest-bearing CBDC. It was a turning point: digital cash was transforming into digital deposits. E-CNY wallet balances were now classified as commercial bank liabilities, with interest rates determined under the PBOC's supervision in accordance with existing deposit rate self-regulatory conventions. Just as physical cash becomes a deposit when placed in a bank, digital cash had begun following the same path.
Yet the most noteworthy feature on this dashboard is not a number.
Programmable money. The core design principle of the e-CNY, as laid out in the PBOC's 2021 white paper. Conditional automatic execution via smart contracts. Put simply, it means conditions can be embedded in money itself.
The feature first went live in a local government subsidy experiment. Semiconductor industry development subsidies were disbursed in e-CNY, with built-in conditions restricting their use to semiconductor equipment purchases within three months. Unused tokens would expire.
Picture the mechanics in concrete detail. A semiconductor equipment manufacturer in Guangdong Province receives a 30-million-yuan subsidy in e-CNY. When the finance officer checks the balance in the company's internal system, conditions appear next to the amount. Permitted use: semiconductor equipment and raw materials. Expiration: 90 days. This money cannot be used for employee bonuses, real estate purchases, or wire transfers to overseas accounts. A smart contract embedded in the token verifies every transaction and blocks any expenditure that fails to meet the conditions. The finance officer transfers payment to an equipment supplier, and once the token confirms the conditions have been fulfilled, it converts into standard e-CNY. Proof that the subsidy reached its intended destination is automatically recorded on the ledger.
This was not the only use case. In the digital distribution of consumer coupons — hongbao (红包) in Chinese — programmable money reached a much broader public. Local governments in pilot cities such as Shenzhen, Suzhou, and Chengdu distributed e-CNY hongbao to millions of residents to stimulate consumption. When a digital envelope containing 200 yuan arrived in a smartphone wallet, it had to be spent at designated merchants within seven days. After the deadline, the token would automatically expire. Currency that compels spending rather than saving. It was the digital resurrection of the "stamped money" that Keynes dreamed of in the 1930s but could never implement. Carbon credit experiments were also underway. In some pilot cities, trials had begun linking e-CNY rewards to environmentally friendly behaviors such as using public transit or charging electric vehicles. Money does not merely incentivize behavior — money itself is generated as the consequence of behavior.
This is a fundamentally different approach from conventional monetary policy. The traditional pathway is to lower the benchmark interest rate so that bank lending increases, and hope that increased lending will stimulate investment — but hope is not a guarantee. South Korea knows well the experience of cutting rates only to watch the money flow exclusively into real estate. The tools available to central banks — benchmark rates, reserve requirements, open market operations — were all indirect instruments of persuasion. Even when liquidity was released, where it went was left to the market's judgment. The e-CNY's programmable money inverts that fundamental premise. Not persuasion but designation. Not expectation but enforcement. In the 330-year history of monetary policy, writing a destination into the money itself was an experiment without precedent.
The authority to allocate capital shifts from the invisible hand of the market to conditions specified in code. For six hundred years, the gatekeeper was always human. The Medici branch manager, the Court of Directors at the Bank of England, the loan officer at a savings bank — they all judged: "Should this money go there?" The e-CNY is an attempt to replace that judgment with code. Not opening and closing a gate, but programming conditions into the gate itself.
Here, the relationship between the e-CNY and existing electronic payment platforms — WeChat Pay and Alipay — becomes critical. The two platforms, which control over 90 percent of China's mobile payment market, were already deeply embedded in Chinese daily life. Buy stinky tofu from a street vendor with WeChat Pay; pay a taxi fare with Alipay. The relationship between the e-CNY and existing electronic payment systems described in the PBOC white paper — "complementary, not a replacement" — was diplomatic language; the reality was closer to a check on power. If Tencent and Ant Group could monopolize the nation's payment data and decide whether payment infrastructure runs or stops, then the de facto owner of monetary sovereignty would be not the PBOC but private platforms. The e-CNY was the central bank's instrument for reclaiming its place at the base layer of the digital payment ecosystem. In practice, the e-CNY app was designed to use WeChat Pay and Alipay as payment channels — a strategy of positioning itself not as a competitor but as underlying infrastructure. Users can spend e-CNY inside WeChat Pay, but the ledger for that transaction is managed by the PBOC. The surface is private; the foundation is the state.
Beneath the fluorescent lights of the windowless corridor, the question seldom escapes into the open.
Whether it amounts to efficiency or surveillance depends on where the questioner stands.
The PBOC white paper states the principle of "managed anonymity" (可控匿名, kekong niming). Small transactions are anonymous; large transactions are traceable. Technically, this is implemented through a tiered wallet system. Tier 1 wallets are linked to bank accounts, require real-name verification, and carry high transaction limits. Tier 4 wallets can be opened with just a phone number and are close to anonymous, but with low limits — 2,000 yuan per transaction, 5,000 yuan per day. As you move up the tiers, identity becomes more transparent and limits increase. The information firewall is designed so that commercial banks can see transaction data but not the user's identity, while the PBOC can verify identity but does not access routine transaction details. However, "when legal requirements are met," the PBOC can combine both sets of information. If Bitcoin was "uncensorable money," the e-CNY is money with censorship built into the design. The difference is not whether censorship exists, but who wields it and under what conditions.
From the gatekeeper's perspective, this is an innovation that maximizes the precision of capital allocation. It prevents subsidies from leaking, blocks speculative capital flows, and seals off pathways for tax evasion. From the protocol builder's perspective, this is the most sophisticated surveillance apparatus in history. A system in which the state sets conditions on every transaction, monitors in real time, and can freeze funds in any wallet at will. The boundary between the two views is blurred. The same technology that enables the precise delivery of subsidies can simultaneously freeze the wallet of a dissident. The tool is neutral, but the hand that wields it is not.
2
Cross the Pacific, and the landscape changes.
On July 18, 2025, in Washington, D.C., the GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins) was signed into law by President Trump as Public Law 119-27. The bill, which had passed the Senate a month earlier by a vote of 68 to 30, passed the House 308 to 122. A majority of Republican members and roughly half of the Democratic caucus voted in favor. Bipartisan consensus is rare in American politics. Stablecoin regulation became one of those rare instances. Senate Banking Committee Chairman Tim Scott led the original draft, while Democrat Kirsten Gillibrand co-sponsored. The law's framework was finalized on the day of signing, but the effective dates for detailed provisions varied, with different grace periods set for major clauses so that substantive implementation would proceed in stages.
The architecture of the bill is concise. Stablecoin issuers must obtain either a federal license or a state charter. For every dollar of stablecoin issued, they must hold one dollar in reserves consisting of U.S. Treasuries, repurchase agreements, or cash, with monthly public disclosure of those holdings. Issuers exceeding $10 billion in circulation fall under federal supervision; those below the threshold may opt for state oversight. Algorithmic stablecoins — those that maintain their value purely through algorithms without collateral — were banned from new issuance for two years, a provision in which the memory of Terra/Luna's $50 billion evaporation in 72 hours in 2022 had hardened into statutory text.
The U.S. Treasury Secretary, in a statement issued on the day of signing, declared that stablecoins "strengthen the dollar's reserve currency status and demand for U.S. Treasuries." A White House fact sheet echoed the same logic. The global proliferation of dollar-based stablecoins is a digital extension of dollar influence.
The numbers back this claim. As of late 2025, the circulating supply of USDT issued by Tether stood at approximately $186 billion; Circle's USDC was at roughly $75.3 billion. A substantial portion of both stablecoins' reserves was invested in U.S. Treasuries. A closer look at Tether's reserve structure makes the scale even clearer. As of the third quarter of 2025, Tether's total reserves were $181.2 billion, exceeding its $174.4 billion in liabilities by $6.8 billion in equity. Of this, U.S. Treasury holdings alone amounted to $135 billion. Compared to the sovereign debt holdings of nations around the world, this private company registered in the Cayman Islands holds more U.S. Treasuries than many sovereign states. A digital token issued by a private company had become a major buyer of U.S. government debt. On top of that, Tether holds more than 148 metric tons of gold, placing it among the world's top 30 gold-holding institutions. A stablecoin issuer sitting on more gold than most central banks.
Here, a curious paradox emerges. Stablecoins were born for decentralization. The founding ideal was to transmit value without banks, without central banks, without borders. Yet the reality created by the GENIUS Act is the opposite. Private stablecoins have become the conduit extending the dollar's sphere of influence into digital space. Over the course of 2025, stablecoin transaction volume reached $33 trillion. Of that, USDT processed approximately $13.3 trillion and USDC approximately $18.3 trillion. Tether's market dominance declined from 91.6 percent in 2024 to 62 percent by early 2026, but that was a consequence of the overall stablecoin market expanding rapidly and attracting more competitors. The pie itself was growing.
Lagos, Ikeja. Two o'clock in the afternoon.
In Adeola Ogundipe's apartment, a ceiling fan turns slowly around a rusted axis. It is 34 degrees Celsius outside. Through the window, the sound of generators never stops — NEPA (the Nigerian Electric Power Authority) has cut power again. Ikeja averages eight hours of blackout a day. Adeola runs a 2kVA generator bought with his own money. Gasoline has long since passed 700 naira per liter. The green indicator light on the UPS battery next to the generator blinks. When that light goes out, the monitor goes dark. When the monitor goes dark, the work goes with it.
Adeola is a freelance front-end developer. Twenty-eight years old. He graduated from the University of Lagos with a degree in computer science and takes on projects from American and European clients through Upwork and Toptal. His average monthly income is $2,800 — more than ten times the Nigerian average wage — but the path that money takes to reach his hands is the problem. He has a bank account. GTBank. But when he receives an international wire transfer, fees consume 8 to 12 percent of his income. Intermediary bank fees, currency conversion fees, and the gap between the Central Bank of Nigeria's official exchange rate and the black-market rate add up so that for every $100 he earns, what he ends up holding is worth less than $88 in naira. Transfers take three to five business days to arrive. Sometimes a week.
Starting in 2023, Adeola began asking clients to pay him in USDC. At first, the request raised eyebrows. Now his Upwork profile reads, "USDC payments preferred." When a client sends USDC, it arrives in his wallet within minutes via the Solana network. The fee is less than one dollar.
And Adeola does not convert that USDC to naira.
The naira depreciated more than 55 percent against the dollar on official rates in 2023 alone. The decline continued through 2024, and by 2025 annual inflation was running above 25 percent. Adeola recalls a voice message his mother sent from Ibadan — "The price of a bag of rice went up again." A 50-kilogram bag of rice had jumped from 28,000 naira two years earlier to 75,000 naira. For Adeola, holding USDC is not speculation. It is defense. A dollar stablecoin balance preserving value better than a naira deposit is not financial theory — it is a reality he feels every month.
While Washington reaches bipartisan consensus on the GENIUS Act, Beijing experiments with the e-CNY's programmable money, and Frankfurt debates the privacy architecture of the digital euro — Adeola appears nowhere in any of these discussions. The CBDC discourse, centered on advanced economies, speaks of "monetary sovereignty" and "monetary policy transmission channels," but for Adeola, monetary sovereignty means having a wallet where the value of his labor does not melt away. Alternative finance where banks have failed. That was the reality of Lagos.
A middle-class couple in the Palermo Soho neighborhood of Buenos Aires performs the same ritual every payday — the moment pesos hit their account, they convert half into USDT. In a country where the gap between the official peso exchange rate and the unofficial "blue dollar" rate exceeds 40 percent, stablecoins are a parallel financial system. Instead of standing in line before the informal money changers (arbolitos) on Calle Florida, they tap a smartphone screen a few times for the same result. An exporter in Ho Chi Minh City, Vietnam, settles trade payments in stablecoins. A bank transfer that would take three to five days shrinks to minutes. In all of these transactions, not a single physical dollar crossed a border, yet the dollar's influence did. The base currencies of DeFi protocols are USDT and USDC; the U.S. dollar underpins decentralized finance worldwide. Liquidity pools on Ethereum, payment layers on Solana, derivatives markets on Arbitrum — regardless of the chain, the reserve currency was the dollar stablecoin. No one outside the Treasury building in Washington designed this. It just happened.
Where China seeks to secure control through a state-issued CBDC, the United States chose a strategy of delegating issuance to the private sector while binding it with regulation. The government does not issue, but the government regulates. A CBDC without a CBDC. In the end, both aim at the same objective — control over the flow of digital currency.
The Federal Reserve stands one step back from this picture. FedNow — the real-time payment system the Fed launched in July 2023 — is not a CBDC. The Fed itself stated as much in its FAQ: "No decision has been made on issuing a CBDC, and issuance would require legislative authorization." And Congress chose to lock that door shut entirely. In May 2024, the House passed the CBDC Anti-Surveillance State Act by a vote of 216 to 192. Led by Representative Tom Emmer, the bill prohibited the Fed from directly issuing a CBDC or providing accounts to individuals, and stipulated that even pilot programs could not proceed without separate congressional authorization. An executive order from President Trump pointed in the same direction. America's choice was clear. Instead of the state issuing a digital dollar directly, it would corral private stablecoins within a regulatory fence. A digital dollar exists, but it is not the government's dollar — it is Tether's dollar, Circle's dollar. Issuance is private, backing is Treasuries, supervision is federal. This triangular structure was the American answer.
3
October 30, 2025. Frankfurt.
Along the banks of the Main river, which cuts slowly through the city, a 185-meter twist tower rises above the Grossmarkthalle — a former wholesale market hall built in the 1920s. Designed by the Viennese architecture firm Coop Himmelb(l)au, this deconstructivist structure consists of two polygonal towers leaning against each other. From a distance, the two towers seem as though they should not be able to stand. The headquarters of the European Central Bank (ECB). Monetary policy for the twenty nations of the eurozone is decided inside this building. Looking up from the banks of the Main, the horizontal lines of the old market hall intersect with the vertical thrust of the modern tower — past and present physically overlapping, in a way that mirrors how Europe approaches digital currency.
The ECB Governing Council declared the completion of the digital euro's preparation phase. Launched in November 2023 and spanning twenty-four months, this phase saw the ECB finalize a draft of the digital euro scheme rulebook, select platform components and related service providers, and conduct innovation platform experiments with market participants. ECB President Christine Lagarde said at a press conference: "The preparation phase has been completed. Whether to proceed to the next phase is a decision for the European Parliament and the Council."
From the investigation phase that began in October 2021 to the preparation phase in November 2023, then to the decision on entering the next phase in October 2025 — a journey spanning four years. If EU legislation is finalized in 2026, pilot transactions could begin by mid-2027, with the target for issuance readiness set at 2029. Compared to the e-CNY, which had already processed 3.4 billion transactions, this was slow. Compared to the speed at which America's GENIUS Act was legislated, it was also slow. Europe chose this slowness deliberately.
The design principles of the digital euro occupy a position between two extremes. It supports offline payments — small transactions are possible even without an internet connection — and guarantees anonymity for small-value transactions, while complying with anti-money laundering (AML) and counter-terrorist financing (CFT) regulations. An attempt to replicate the privacy of cash in digital space.
This is a European compromise. Neither surveillance nor laissez-faire, but a third way. If China's e-CNY is designed so that "the state can see every transaction," and America's GENIUS Act creates a structure where "the private sector operates but law enforcement can gain access," then the digital euro is a promise that "the state issues but will not look at small transactions."
Lagarde's biography illuminates the character of this compromise. Born in Paris, raised in a family of teachers — her father, Robert Lallouette, taught English; her mother, Nicole, taught Latin, Greek, and French literature. As a teenager she was a member of the French national synchronized swimming team. After a year as an exchange student at Holton-Arms School in Maryland, she graduated from the law faculty of Paris X (Nanterre). She began her legal career at the international law firm Baker & McKenzie, rising to chair of its global executive committee, then served as France's Minister of Finance before becoming the first female Managing Director of the IMF in 2011. When she took office as ECB President in November 2019, assessments from those around her were consistent: "A diplomat and negotiator, not a technocrat or economist." Ranked second on Forbes's annual list of the world's 100 most powerful women in nearly every edition, her strength lay not in rigid principles but in forging flexible consensus — and the digital euro project was precisely the stage that demanded that skill.
Because she had to forge consensus among twenty eurozone nations. Germany's cash usage remained stubbornly high. A 2024 Bundesbank survey found that cash still accounted for more than half of everyday payments in Germany. In a country where offering a card at a Munich bakery to buy a Brezel is met with "Nur Bargeld" ("Cash only"), the German view of the digital euro bordered on wariness — cultural resistance to the loss of cash's anonymity ran deep. In a nation that had experienced two dictatorships, the possibility that the state could see every transaction was not a question of technology but of history. On the opposite end stood Sweden. The Riksbank had been running its e-krona pilot since 2020, and Sweden's cash usage was a mere 1 percent of GDP. Half the cafes in Stockholm already displayed "No cash accepted" signs. For them, the digital euro was innovation that had already arrived late. Southern Europe's perspective was different still. Italy and Greece were focused on financial inclusion — a CBDC as a means of enabling digital payments for people without bank accounts. Twenty voices weighed in on the design of a single currency. Even after marathon meetings ended in the ECB headquarters conference room in Frankfurt, people strolling along the Main still reached into their pockets for coins.
The three models stand in contrast.
China: the state issues, the state embeds conditions, the state watches flows in real time. Speed is fastest, control is tightest. 3.4 billion transactions and 2.25 billion wallets are the evidence.
United States: the private sector issues, the government draws the regulatory perimeter. It moves fast by leveraging existing dollar infrastructure. More than $260 billion in stablecoins are already in circulation. The digital extension of the dollar's sphere of influence is the core objective.
Europe: the central bank issues, but it negotiates the balance between privacy and control. Speed is slow, but norms are established first. Issuance is targeted for after 2029.
This is not a competition of technology. It is a competition of philosophy. Three different answers to the question "What is money?" are being tested simultaneously.
4
Seoul, Yeouido — South Korea's financial and political nerve center.
On April 1, 2025, the Bank of Korea launched a live CBDC transaction experiment under the name Project Hangang. The pilot involved 100,000 participants and seven banks including KB Kookmin, Shinhan, Hana, and Woori, testing QR code-based small-value payments. Participants converted bank deposits into digital tokens, with a per-person, per-charge limit of 1 million won (approximately $730) and a cumulative spending cap of 5 million won. Over the three months from April to June, participants made purchases with digital won at convenience stores and cafes. The technology worked. The problems lay outside the technology.
The pilot was suspended in June 2025, less than three months after launch. Infrastructure costs of approximately 5 billion won per bank were a stumbling block, and the cost-benefit case was unclear. Regulatory uncertainty was also cited as a reason for suspension. South Korea already possessed one of the world's most advanced mobile payment markets, dominated by Kakao Pay, Toss, and Samsung Pay. It was hard to find a clear answer to what a digital won could add to this ecosystem. In a country where Kakao Pay alone processes millions of transactions per day, what reason did the central bank have to build a separate digital currency infrastructure? One executive at a participating bank was blunter: "It's no different from proposing to build a new highway where one already exists."
The suspension was not an abandonment. It was a pivot. The Bank of Korea reframed the CBDC not as a general payment instrument but as a vehicle for delivering government subsidies. The vision was to disburse 110 trillion won in government subsidies via CBDC. The concept resembled China's programmable money, but differed in scale and purpose. By early 2026, the pilot had been expanded and relaunched with new participating merchants including Daiso. At the same time, the same seven banks began independently pursuing won-denominated stablecoins. A central bank CBDC and private bank stablecoins were gestating competitively, in the same country, at the same time.
The Financial Services Commission (FSC) conference room. Upper floors of the government complex on Yeouido. The Han River is visible through the windows, but no one in this room is looking at it. Afternoon sunlight slants through the glass and reflects off laptop screens on the long conference table. Someone has half-lowered the blinds. Laptops and documents are spread across the table; coffee in paper cups grows cold; on the whiteboard, someone has sketched a diagram — "CBDC <-> Stablecoin <-> DeFi." About fifteen people are seated. Officials from the FSC, staff from the Bank of Korea's Digital Innovation Bureau, fintech officers from the Financial Supervisory Service (FSS), and bank practitioners. The agenda: discussions related to the Digital Asset Basic Act.
"With the Bank of Korea's CBDC pilot suspended, private stablecoins could effectively assume the role of a digital won," said the Bank of Korea representative.
"If a won-denominated stablecoin gets onto a DeFi protocol, can we control it?" asked an FSC commissioner.
"Technically, transfer restrictions can be embedded in the token itself, but usage on decentralized protocols..." A bank practitioner trailed off.
"Just wrap it and you're done, aren't you?" someone interjected. They were referring to the technology of wrapping a token — encasing it in a form usable on another chain. A brief silence followed.
Someone cleared their throat. Outside the window, a single cruise boat moved slowly along the Han River. No one looked that way.
That pause held a question larger than any single loan. Can the sovereignty of the won be maintained in digital space? Can a nation's monetary policy function atop borderless protocols? Is the monopoly on money issuance and control that central banks have held for 330 years still valid in the face of code?
One person sat in the expert witness section. Lee Junhyeok. The developer from Chapter 9 who had built a protocol using autonomous AI agents to optimize DeFi liquidity. The FSC had invited private-sector experts for technical consultation on digital assets. He wore jeans and a neutral-toned shirt. Everyone else in the conference room was in a suit. Among tightly knotted neckties, the collarless neckline of his shirt stood out conspicuously. He had brought a laptop but had not opened it. Instead, he had placed a single pencil and a sheet of A4 paper in front of him — the tools of someone who writes code. He was a person who thought in the language of technology, and the other attendees in this room thought in the language of regulation. The two languages sat at the same table, but translation was not easy.
One of the commissioners asked: "Is it technically possible to assign a nationality to a private stablecoin? So that a won stablecoin would circulate only domestically?"
Lee Junhyeok paused to think. He began writing something on the A4 paper, then stopped. And said:
"Code doesn't recognize borders."
The conference room went quiet for a moment. It was a short sentence, but it contained the entirety of the problem this room faced. You can embed geographic restrictions in a token contract. But the moment someone wraps that token and deploys it on another chain, the restrictions are neutralized. Once a won stablecoin is on Ethereum, there is no technical way to prevent a token issued in Seoul from being traded in a New York liquidity pool, or from being exploited for arbitrage by an AI agent in Singapore. Regulation operates only within jurisdictions, but protocols operate outside them. One commissioner set his pen down on the table. The sound was conspicuously loud.
South Korea's situation was a microcosm. It was virtually the only case where both the American model (private stablecoins) and the Chinese model (state CBDC) were being tested simultaneously. A CBDC pilot and private stablecoin initiatives were unfolding in the same time frame, in the same country, under the same regulatory authorities.
And there was a third reality that went undiscussed in this conference room. The number of cryptocurrency investors in South Korea had surpassed 16.2 million — roughly 32 percent of the total population, and a higher share of the adult population still. It had overtaken the number of stock market investors. Those in their 30s and 40s accounted for more than half of investors, and in a recent survey, one in two adults reported having invested in cryptocurrency. Trillions of won traded daily on Upbit and Bithumb. In the fourth quarter of 2025, Upbit's trading volume was approximately $180.7 billion; Bithumb's was approximately $86.5 billion. And a significant share of those funds was flowing out to overseas exchanges and DeFi protocols — over the course of 2025, South Korean crypto traders sent $110 billion to foreign exchanges. While regulators debated the design of CBDCs and stablecoins, the market was already building its own answers. Whichever way the outcome tilted, it would set a precedent for other Asian nations to study.
5
One piece is missing from this picture. The three models — China, the United States, and Europe — each design digital currency within their own territories. But capital does not stay within territories. Cross-border payments, trade settlement, central bank foreign exchange transactions — in these domains, the three models collide.
mBridge. A multinational CBDC bridge project. The central banks of China, Hong Kong, Thailand, the UAE, and Saudi Arabia participated, supervised by the BIS (Bank for International Settlements). The experiment aimed to enable the exchange of each country's CBDC on a single platform. In June 2024, the Hong Kong Monetary Authority announced that mBridge had reached the "minimum viable product (MVP)" stage. More than 4,000 cumulative cross-border payments totaling $55.5 billion had been processed. Approximately 95 percent of the transaction volume was in e-CNY.
Behind this project lay one person's vision. Zhou Xiaochuan (周小川), former Governor of the People's Bank of China. For sixteen years, from 2002 to 2018, he steered China's monetary policy. The paper he published on March 23, 2009 — "Reflections on Reforming the International Monetary System" (关于改革国际货币体系的思考) — was the most systematic alternative ever proposed to the dollar-centered order. Its core argument was clear: a system in which a single nation's credit-based currency serves as the global reserve currency carries an inherent contradiction. The Triffin dilemma — the conflict between domestic monetary policy objectives and the goal of supplying global liquidity — is inescapable. Zhou wrote that what was needed was "an international reserve currency that is disconnected from individual nations and is able to remain stable in the long run." He proposed expanding the role of the IMF's Special Drawing Rights (SDR) by issuing SDR-denominated bonds and making the SDR a settlement instrument for international trade and financial transactions. The proposal also called for broadening the SDR basket to include the currencies of all major economies, with GDP as a weighting factor.
The paper triggered a media storm. Headlines proclaiming "China challenges the dollar" proliferated, and the proposal was in turn misunderstood, exaggerated, and hastily dismissed. But a decade later, the spirit of that paper was realized not through the SDR but in the form of the e-CNY and mBridge. Infrastructure for the direct digital exchange of central bank currencies, bypassing SWIFT and without converting to dollars. Had it succeeded, it could have been the most fundamental transformation of the international settlement system since Bretton Woods in 1944.
Then, on October 31, 2024, the BIS withdrew from mBridge.
BIS General Manager Agustin Carstens announced the BIS's departure from the project. The BIS characterized it as a "graduation" — the official explanation being that after four years of supervision, the participating central banks could now operate the project independently. But the unofficial context was different. Concerns had arisen that the composition of participants — China, the UAE, Saudi Arabia, Thailand — could allow the platform to function as a channel for circumventing Western sanctions. There was also the view that infrastructure to replace the dollar-centered SWIFT system was forming under Chinese leadership. The concentration of roughly 95 percent of transactions in e-CNY was cited as supporting evidence for these interpretations. The timing of the BIS withdrawal announcement, coinciding with the BRICS summit, was also hard to dismiss as coincidence.
After Russia's invasion of Ukraine in 2022, the West's exclusion of Russia from SWIFT proved that financial infrastructure could be weaponized. Seven major Russian banks were cut off from SWIFT, and approximately $300 billion in overseas reserves were frozen. The ruble crashed 30 percent overnight, the central bank doubled its benchmark rate to 20 percent, and capital controls were imposed on foreign transfers. The power of sanctions was unmistakable. But the weapon works only when SWIFT is the sole payment infrastructure. Russia had already built its domestic payment system, SPFS, following the 2014 Crimea sanctions, connecting over 550 institutions across 24 countries. It then deepened its link with China's CIPS (Cross-Border Interbank Payment System). In 2023, CIPS processed 6.6 million transactions worth approximately $17 trillion, a 27 percent year-over-year increase. By 2024, CIPS's throughput had reached roughly 16 percent of SWIFT's — up from about 2 percent just four years earlier. In December 2025, the PBOC enacted rule revisions reducing SWIFT dependency in CIPS's final settlement process.
If mBridge matures, sanctioned nations would have a pathway to circumvent the dollar-SWIFT system. The BIS's withdrawal was not a technical judgment but a geopolitical one. The calculation was that the West's most powerful economic weapon could not be allowed to be neutralized.
Even after the BIS withdrawal, the participating countries decided to operate mBridge on their own. In July and August 2025, participation in China expanded to non-state-owned banks and regional banks. In November, the UAE Ministry of Finance and the Dubai Department of Finance executed the first government-to-government transaction on the mBridge platform using the digital dirham. The participants were filling the space vacated by the Western supervisor. The Phase 1 completion target was the first half of 2026. The observer participation list included more than 30 central banks and international organizations, among them the Philippines, Indonesia, France, Israel, Italy, and South Korea.
The lesson is simple. Technology tried to erase borders, but politics built higher walls on top of them. The mBridge code worked; multinational CBDC exchange was technically feasible. But before the question of "who controls this infrastructure," technical success became secondary.
The internet provided the precedent. In the 1990s, the internet was born as a single global network. The free flow of information across borders. But thirty years later, China's Great Firewall blocks Google and Facebook and has replaced them with Baidu and WeChat. Russia's RuNet has experimented with disconnection from the external internet. Iran built its National Information Network (NIN). A single internet had splintered into multiple internets. The Splinternet. The same fragmentation was underway in money: a single global financial network fracturing into multiple bloc-based networks. A phenomenon that might be called the Splintercoin.
In departing from mBridge, the BIS redirected resources to another project. Agora — a tokenization-based international settlement prototype — was due to report in the first half of 2026. A public-private joint project involving seven central banks and more than 40 financial institutions, it experiments with tokenizing commercial bank deposits and central bank money for exchange on a single network. If mBridge was a China-led alternative, Agora was a Western-led one. Rather than cede ground to mBridge, the Western bloc chose to build its own infrastructure. Instead of a single global payment infrastructure, two bloc-aligned infrastructures were taking shape. A dollar-SWIFT-Agora axis and a yuan-CIPS-mBridge axis. Cold War alliances were reincarnating as digital currency blocs.
6
Three grammars coexisted. In a loan committee room in Seoul, humans judge; in New York, BlackRock's Aladdin rebalances by algorithm; on Ethereum's Aave, code executes loans. Three grammars, each allocating capital by its own rules in its own domain, operating in the same era.
The tension created by that coexistence detonates at the level of the nation-state.
The e-CNY pushes the first grammar — the gatekeeper's grammar — to its extreme. Instead of a human loan officer, code sets the conditions, but the entity writing that code is the state. The subject of control has shifted from human to code, but control itself has only intensified. Where Giovanni de' Medici sent instructions to his branch manager by letter, the PBOC embeds conditions directly in the token. Giovanni's letter could be ignored — as Portinari in Bruges actually did. But conditions embedded in a token cannot be ignored. When the code refuses execution, the transaction simply does not occur. The newest and most complete form of the gatekeeper. Code instead of a letter; enforcement instead of trust.
The GENIUS Act's stablecoins are a hybrid of the second grammar — the algorithm's grammar — and the first. Issuance and circulation are handled by private-sector algorithms, but the regulatory framework is set by the state. It resembles how BlackRock's Aladdin manages $14 trillion but moves within the SEC's regulations. Efficiency to the market, safeguards to the government. Tether's $135 billion in U.S. Treasury holdings starkly reveals the character of this hybrid — a tool born with decentralization's ideals has become a core buyer in the world's oldest sovereign debt system.
The digital euro seeks the narrow path between the two extremes. The central bank issues, but it promises to protect the privacy of small transactions. An attempt to transpose the anonymity of cash into digital space. But the anonymity of cash was something naturally imposed by physical constraints — there is only so much cash you can fit in a bag. Artificially setting that limit in digital space is a challenge of a different order. Between the right of a German citizen to buy a two-euro Brezel at a Munich bakery without state surveillance and the state's duty to prevent terrorist funds from being laundered through the digital euro — that is why Lagarde must forge consensus across twenty nations.
All three models stand before the same question: Can this money be controlled?
Giovanni de' Medici tried to control his branches. With letters, with secret ledgers, with partnership contracts. But Portinari in Bruges ignored headquarters' instructions. The Bank of England tried to control the currency. With the gold standard, with its monopoly on banknote issuance, with the bank rate. But the South Sea Bubble inflated beyond its control. The Financial Supervisory Service of Chapter 3 tried to control savings banks. With BIS capital ratios, prompt corrective action, CAEL ratings. But the controlling shareholder of Busan Savings Bank created 120 special purpose companies to bypass every safeguard.
In 2025, the same question returned at the national level. Central bank benchmark rates have no effect on DeFi protocol interest rates; DeFi rates are determined by supply and demand in liquidity pools; AI agents do not recognize borders. Can the Bank of Korea's benchmark rate adjustments stop the flow of funds that South Korea's 16.2 million crypto investors send to overseas exchanges? Can the Central Bank of Nigeria's capital controls detect the salary a Nigerian freelancer receives in USDC? For the first time in its 330-year history, the central banking system is confronting a domain where its language does not translate.
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Speed versus legitimacy. That is the core trade-off of the digital currency war.
Zhou Xiaochuan's successors move fast within the structure of a single-party state. Lagarde moves slowly under the constraint of forging consensus among twenty nations. Democratic consensus is slow but secures broad legitimacy; authoritarian decisions are fast but rest on a narrow base of legitimacy. The founding of the Bank of England in 1694 took months of parliamentary approval, but that approval granted the bank a lifespan of 330 years.
And in the digital currency war, speed matters. Network effects are at play. The platform that spreads first becomes the standard. SWIFT was an example, as were Visa and Mastercard. Facebook did not beat MySpace with better technology but with faster adoption. If the e-CNY penetrates trade settlement in Southeast Asia and the Middle East through mBridge, the participating nations riding on that network will not easily defect. Every node in the network raises the cost of exit. By the time Europe issues the digital euro in 2029, a significant portion of the game may already be decided. France and Italy both appear on mBridge's observer participation list, which speaks to this tension — core eurozone nations are watching a China-led infrastructure from the sidelines.
Yet speed is not everything. Between first-mover advantage and normative legitimacy lies an unresolved tension. The standard that spreads fastest is not necessarily the best standard. VHS beat Betamax, but VHS was not the superior technology. SWIFT entrenched itself as the standard for international settlement for half a century not simply because it was fast but because participants trusted its governance — and the BIS's withdrawal from mBridge was precisely a matter of that trust. Even if the e-CNY wins on speed, winning on norms is a different matter. Can other nations trust an international settlement system built atop an infrastructure capable of surveilling every transaction of its own citizens in real time? The value of the consensus Lagarde has spent four years building is, in part, an answer to that very question.
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The competition among the three models ultimately reveals a single paradox.
Six hundred years ago, the Medici bill of exchange was an innovation because it allowed capital to move across borders without physically transporting gold. A single signature on a bill of exchange determined the destination of capital across the Alps. That signature presupposed trust in the name Medici. The Bank of England appeared in Chapter 2 for the same reason — to replace personal trust with the trust of the state as the foundation of currency.
The digital currency war now underway is the act of re-asking what that foundation of trust should be. China demands trust in state power. The United States demands trust in the dollar and U.S. Treasuries. Europe demands trust in norms and the rule of law. Bitcoin proposes an answer from an entirely different dimension: trust in mathematics. Trust guaranteed by the SHA-256 hash function and elliptic curve cryptography. A currency for those who do not trust the state — that was the original vision Satoshi Nakamoto presented in the Bitcoin white paper. "An electronic payment system based on cryptographic proof instead of trust." All four models — state power, sovereign debt, normative consensus, mathematical proof — carry their own vulnerabilities. State power can be abused, sovereign debt can enter crisis, normative consensus is slow, and mathematical proof faces the limits of scalability.
And beneath all of this competition, the third grammar operates quietly. On DeFi protocols, stablecoins circulate without regard to nationality, and AI agents allocate capital optimally in millisecond intervals. Code doesn't recognize borders, Lee Junhyeok said. That statement also meant that code does not recognize regulation. While nations compete over the sovereignty of digital currency, the very object of their competition is slipping beyond territorial reach.
The tension lies here. Three national strategies compete with one another, while simultaneously the domain that all three cannot control continues to grow. The more the gatekeeper fortifies the gate, the wider the spaces without gates become. The more conditions the e-CNY embeds in tokens, the more attractive tokens without conditions become. The more the GENIUS Act corrals stablecoins within a regulatory fence, the more protocols outside the fence grow. The more the digital euro refines its consensus, the more time systems that operate without consensus gain.
The digital yuan, the GENIUS Act, the digital euro — each nation's response reflects not a difference in technology but a difference in philosophy. Surveillance or freedom, control or innovation. Yet beneath all of these debates flows the same anxiety: the sense that the authority to determine the flow of capital is drifting away from human hands.
For Adeola in Lagos, none of the three models was an answer. The e-CNY's programmable money, the GENIUS Act's regulatory framework, the digital euro's privacy consensus — none of them changed his daily life. His answer was already in his wallet — USDC. Not something a state designed, but something that grew where the state had failed.
Six hundred years ago in Florence, when Giovanni di Bicci de' Medici signed a bill of exchange, it was the act of one person's judgment determining the destination of capital. In 2025, when the chairman of a loan committee in Seoul stamps his seal, the essence is the same. A human judges, a human decides, a human bears responsibility. This 600-year-old structure is now, for the first time, facing a fundamental challenge. What form that challenge will take is the question the next chapter asks, as it closes the journey of six hundred years.