China Accelerates Digital Yuan Development to Challenge Dollar Dominance

Economic

Cryptocurrency

Summary:

China is expanding the use of its central bank digital currency, e-CNY, with transactions reaching 7.3 trillion yuan by mid-2024. While Beijing seeks to raise the yuan’s international profile against the U.S. dollar’s 47% global share...

Strategic goals behind e-CNY

China’s push for digital currency stems from a strategic ambition to enhance the global role of the yuan. As the world’s second-largest economy, Beijing views the digital yuan as a tool to reduce reliance on the dollar-dominated financial system and to position itself as a credible alternative in global trade and payments. The plan correlates directly with broader geopolitical goals: by widening e-CNY use, China seeks to build parallel financial infrastructure less vulnerable to U.S. sanctions and SWIFT dependency.

Since its pilot launch in 2019, the digital yuan has become increasingly integrated into daily life. Large corporations, such as McDonald’s, joined early trials, while local governments in China now use e-CNY to pay public sector salaries. The payment ecosystem already accustomed to Alipay and WeChat Pay has facilitated acceptance. By July 2024, transaction volume had reached 7.3 trillion yuan, a direct result of scaling adoption in retail, wages, and public transactions. This demonstrates a causal relationship between state-backed incentives and rapid uptake in domestic circulation.

International expansion efforts

China is also promoting e-CNY usage abroad, particularly in Africa, where its trade and investment footprint is expanding. These initiatives aim to strengthen yuan settlement in cross-border trade, correlating with China’s Belt and Road projects. Yet without full capital account convertibility, the yuan’s global role remains constrained. SWIFT data underscores the limitation: as of June 2025, the yuan accounted for only 2.88% of global payment transactions, down from a 4.7% peak in July 2024. The contrast with the U.S. dollar’s 47% share reveals the gap Beijing must overcome.

Beijing is also exploring the issuance of yuan-linked stablecoins, though details remain unconfirmed. Unlike decentralized cryptocurrencies such as Bitcoin, stablecoins are pegged to fiat currencies and serve as efficient payment tools rather than speculative assets. Hong Kong, with its semi-autonomous financial framework, has already implemented laws governing stablecoins as of August 1, requiring full reserve backing for HKD-linked tokens. As China’s offshore financial hub, Hong Kong may serve as the testing ground for yuan-denominated stablecoins. The causal link here is clear: legal infrastructure in Hong Kong could accelerate controlled international adoption of yuan-backed digital assets.

Structural barriers to yuan internationalization

Despite progress, China faces systemic hurdles. The yuan is not freely convertible, and strict foreign exchange controls discourage global investors. These constraints causally limit its capacity to rival the dollar or euro. At present, yuan-based trade finance accounts for only 6% of global transactions, with most clearing concentrated in Hong Kong. Without broader liberalization of capital markets, digital yuan expansion remains more symbolic than transformative.

China’s digital currency program reflects both technological innovation and geopolitical ambition. The e-CNY’s success in domestic adoption shows Beijing’s ability to mobilize infrastructure and scale usage quickly. Yet for it to meaningfully challenge the dollar’s dominance, China must address structural barriers in currency convertibility, regulatory transparency, and integration with international financial systems. Until then, the digital yuan serves more as a foundation for long-term influence than as an immediate substitute for the dollar.

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Gerik

Economic

Signs of renewed momentum

Survey data from S&P Global showed that the preliminary composite Purchasing Managers’ Index (PMI) for the Eurozone rose to 51.1 in August 2025, up from 50.9 in July and well above forecasts of 50.7. This marks the third consecutive monthly increase and the strongest reading since May 2024. A PMI above 50 indicates expansion in activity, and the return of growth in new orders suggests businesses are beginning to regain momentum after a prolonged slowdown.

Manufacturing posted its first return to expansion in more than three years, with the PMI climbing from 49.8 to 50.5. Output surged at its fastest pace in nearly three and a half years, rising from 50.6 to 52.3, reflecting stronger demand and improved production flows. By contrast, services growth moderated, with the PMI slipping from 51.0 to 50.7. This divergence underscores a shift: manufacturing, previously a drag on Eurozone growth, is now stabilizing, while services are expanding at a slower pace.

Country-level dynamics: Germany leads, France stabilizes

Germany, the Eurozone’s largest economy, showed its fastest growth since March 2025 thanks to a robust manufacturing rebound, with its PMI climbing to 50.9, ahead of expectations. France, meanwhile, reported a PMI of 49.7, marking its mildest contraction in a year and signaling progress toward stabilization. Together, these performances suggest that while the Eurozone’s core economies are still uneven, the overall trajectory is gradually turning upward.

ING economist Bert Colijn emphasized that the modest PMI improvement reflects the Eurozone’s resilience in the face of global pressures, supported by new orders and stronger hiring activity. The causal relationship here is evident: higher orders are directly stimulating both production and employment, feeding into business confidence. However, the broader economic outlook remains constrained. Persistent inflationary pressures, weak global trade, and ongoing tariff disputes continue to pose risks, making the recovery moderate rather than robust.

Wider European and global context

Beyond the Eurozone, the United Kingdom also recorded its strongest business activity in a year, driven by services recovery, highlighting that parts of Europe outside the bloc are benefiting from similar trends. Investors now turn their attention to the Jackson Hole symposium hosted by the U.S. Federal Reserve, where central bankers will provide guidance on monetary policy, a factor that could correlate with future Eurozone financial conditions through currency and capital flow effects.

The August PMI data offers cautious optimism: for the first time in over a year, new orders in the Eurozone are rising, industrial activity is rebounding, and Germany is showing renewed strength. Yet with services slowing and economic headwinds persisting, the recovery remains fragile and dependent on both domestic reforms and the trajectory of global trade and monetary policy.

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

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Manuel

Forex

Central Bank

St. Louis Fed President Alberto Musalem said on Friday he will need more data before deciding to support a rate cut at the Fed's September 16-17 meeting given that inflation is above the Fed's 2% target and is expected to move higher, while risks to the job market have yet to be realized.

"It is real that inflation is running closer to 3% than to 2%. That's real, and there is a possibility, not the base case, that there could be some persistence," Musalem told Reuters. "So that's one risk against the unrealized risk, not real yet, of a potential labor market deterioration."

"Policy now is in the right place for a full employment labor market and inflation running above target. It's in the right place ... to be leaning against inflation," Musalem said. "But that's at a full employment labor market. If you happen to assess there's risk to the labor market, then that initial policy setting needs to be adjusted."

"I will be updating my outlook and balance of risks all the way up and until two days, three days before the meeting," he said. "Then I'm going to decide."

Musalem spoke on the sidelines of the Fed's annual research conference here, where Fed Chair Jerome Powell in morning remarks pointed to a possible September rate cut given a "base case" that tariff-driven inflation would likely fade, while risks to the job market appeared to be rising.

"The baseline outlook and the shifting balance of risks may warrant adjusting our policy stance," Powell said, words that investors construed to mean that rate cuts are coming.

However, "the operative word there is 'may,' I think," said Musalem, a voter on interest rate policy this year.

His more noncommittal approach showed the ongoing reluctance among some policymakers to lower interest rates while inflation was both above the Fed's target and at risk of moving higher.

Musalem said he agreed that his base case was now for tariffs to have a short-lived impact on inflation, while slowing economic growth posed greater risk of a slide in the job market.

But he said he was hoping to get a fuller understanding of where the economy is heading to develop an opinion "about the whole path ... For me it's not just about September."

At the September meeting Fed policymakers will provide updated projections of where they think inflation, the unemployment rate and interest rates are heading. Prior to that they will receive what could be a pivotal jobs report, covering the month of August, that could either confirm the weakness some policymakers worry is developing, or leave intact the current assessment of an economy operating around full employment.

"Uncertainty is to some degree lifting," Musalem said. "We now have the outline of fiscal policy. We have the outline of trade policy. Now we know immigration policy. The more data we get, the better...I'm going to be able to assess, are tariffs passing through or not, and whether the labor market risks are real."

Source: Reuters

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Manuel

Stocks

The US government has taken an $8.9 billion, 9.9% stake in Intel (INTC), buying 433.3 million shares in the chipmaker at a price of $20.47 per share.

The government’s investment in Intel will be passive ownership, with no Board representation or other governance or information rights, Intel said in a statement. Intel said the government also agreed to vote with the company's Board of Directors.

Intel said the government's equity stake will be funded by the remaining $5.7 billion in grants previously awarded but not yet paid to Intel under the US CHIPS and Science Act and $3.2 billion awarded to the company as part of the Secure Enclave program.

Intel will continue to deliver on its Secure Enclave obligations and reaffirmed its commitment to delivering trusted and secure semiconductors to the US Department of Defense. The $8.9 billion investment is in addition to the $2.2 billion in CHIPS grants Intel has received to date, making for a total investment of $11.1 billion.

The announcement late Friday comes after President Trump said earlier in the day his administration would take a 10% stake in ailing chip giant Intel. Trump called it a "great deal." Intel's stock closed up 5.5% after the president's announcement.

Intel stock fell 1% in after-hours trading on Friday after details of the deal were confirmed.

"President Trump’s focus on U.S. chip manufacturing is driving historic investments in a vital industry that is integral to the country’s economic and national security," Intel CEO Lip-Bu Tan said in a statement. "We are grateful for the confidence the President and the Administration have placed in Intel, and we look forward to working to advance U.S. technology and manufacturing leadership."

On Tuesday Treasury Secretary Scott Bessent told CNBC that the administration was exploring converting Intel's funding from the Biden-era CHIPS Act into equity aimed at stabilizing the company's US manufacturing business.

Intel is dealing with multiple issues across its businesses. Its manufacturing division is bleeding cash, just as its legacy computer chip segment forfeits market share to rivals Advanced Micro Devices (AMD) and Qualcomm (QCOM) in the PC space. Intel is also woefully behind AMD and Nvidia (NVDA) in the AI race.

The company's market capitalization of $111 billion is less than half of its value in 2021. And CEO Lip-Bu Tan has been forced to lay off 15% of the company's workforce and shelve plans to build plants in Europe.

But the troubled chipmaker is the only large-scale US-based leading-edge chip manufacturer, giving it geopolitical significance as the nation looks to reshore semiconductor production.

Trump's announcement comes the same week that SoftBank Group announced a $2 billion investment in Intel.

All of this comes as Intel continues to navigate its rocky turnaround plan that began under previous CEO Pat Gelsinger. Current CEO Lip-Bu Tan has scaled back Gelsinger's original vision, canceling construction of international plants and further delaying Intel's $20 billion Ohio chip complex.

Intel is fighting to bring customers into its third-party chip foundry business as it works to scale its newest 18A chip technology. The company has already signed agreements to build chips on its technology with Microsoft (MSFT) and Amazon (AMZN), but Intel is still the foundry business's largest customer.

As part of the deal, Intel said the government will receive a five-year warrant, at $20 per share for an additional five percent of Intel common shares, exercisable only if Intel ceases to own at least 51% of the foundry business.

The company is also contending with losing market share in the server business and client computing business to rival AMD, which also benefits from its own AI business. Intel has effectively been shut out of the AI race due to a lack of innovation compared to AMD (AMD) and Nvidia (NVDA).

Source: Yahoo Finance

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Cryptocurrency

Ethereum (ETH) recorded a blistering rally of over 15% in the past 24 hours and surpassed its 2021 all-time high of $4,869.47 on Aug. 22.

As of press time, the second-largest crypto was trading at a high of $4,888 and was continuing to move upward.

Federal Reserve Chair Jerome Powell prompted the price increase after signaling potential interest rate cuts at the Jackson Hole symposium. After Powell’s dovish remarks in Wyoming, the crypto market rallied more than 4% within the hour to reclaim the $4 trillion mark.

The Fed Chair stated that “the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance,” sparking widespread speculation about September rate cuts.

Odds on Polymarket of a potential 25 basis point cut in Sept. 17 jumped from 57% to 79% in a few hours after Powell’s speech.

UBS analysts noted that Powell’s dovish remarks represent “the framing and justification of an inflection in policy bias,” with the Fed Chair shifting mandate emphasis from inflation to employment concerns.

Market-Wide Rally

Bitcoin jumped more than 4% over the past 24 hours, climbing to roughly $117,000 as of press time.

Major cap altcoins followed Bitcoin and Ethereum. BNB recorded a new all-time high of $900 and is priced after climbing over 7% over the period, while XRP, Solana, and Dogecoin posted double-digit percentage gains.

Traditional markets mirrored crypto’s performance, with the S&P 500, Nasdaq Composite, and Dow Jones Industrial Average each rising approximately 2%.

The US dollar weakened against gold and other major assets as investors anticipated easier monetary conditions.

Recovering from multi-year lows

Ethereum’s breakthrough marks a significant reversal from its multi-year low of $1,385.41 reached in April 2025, the token’s lowest price level since March 2023.

The rally damaged leveraged traders, with Coinglass data revealing over $553 million in liquidated positions during the past 24 hours.

Short sellers bore the brunt of losses, accounting for $308 million in liquidations, while long positions shed about $325 million. Ethereum dominated liquidation volumes with $251 million erased, followed by Bitcoin at $102 million.

The Fed’s potential September rate cut could expand liquidity further, potentially extending crypto’s current momentum as markets remain closely tied to US monetary policy decisions.

Ethereum Market Data

At the time of press 10:11 pm UTC on Aug. 22, 2025, Ethereum is ranked #2 by market cap and the price is up 15.69% over the past 24 hours. Ethereum has a market capitalization of $588.78 billion with a 24-hour trading volume of $71.47 billion.

Source: Cryptoslate

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Manuel

Commodity

Russia-Ukraine Conflict

President Donald Trump again threatened Russia with “massive sanctions” over the war in Ukraine unless an agreement can be reached in about two weeks, swerving back to a tougher stance after an inconclusive meeting with President Vladimir Putin.

“I’m not happy about anything about that war — nothing, not happy at all,” Trump said Friday. “I think over the next two weeks, we’re going to find out which way it’s going to go. And I better be very happy.”

He said he would then make a decision “whether or not it’s massive sanctions or massive tariffs or both — or do we do nothing and say, ‘it’s your fight.’”

The threat, which came in response to questions from reporters in the Oval Office, is the latest case of Trump’s whipsawing stance toward Russia and Putin. Trump had demanded a ceasefire before he met with Putin in Alaska a week ago, but said after the meeting he was hopeful about the prospects for a deal.

But the likelihood of a truce dimmed again in the days since the summit, with Russian officials noncommittal about a possible meeting between Putin and Ukraine President Volodymyr Zelenskiy. Officials have also said Russia should have a say in security arrangements for Ukraine.

Speaking at a news conference with NATO Secretary General Mark Rutte in Kyiv on Friday, Zelenskiy reiterated his readiness for both a bilateral leaders’ meeting with Putin as well as a trilateral format including Trump.

“He is currently the only person who can stop Putin,” Zelenskiy said in Kyiv.

It wasn’t immediately clear how seriously to take the latest threat. Trump often suggests that something will happen in “two weeks” when he’s looking to buy time. Last month, Trump threatened 100% tariffs on Russia if it did not comply with his calls for a truce, and on July 28, he gave Russia 10 days to reach a ceasefire with Ukraine.

That deadline came and went without action. And Trump’s own team has offered contradictory views about possible sanctions. In an interview with NBC News last Sunday, Secretary of State Marco Rubio said he didn’t think “new sanctions on Russia are going to force him to accept the ceasefire.”

Even as Trump threatened Russia anew on Friday, he held up a photo of himself and Putin from their Alaska summit and said he would sign it for the Russian leader. Trump also raised the possibility Putin could attend the 2026 World Cup, which is being held in the US, Mexico and Canada.

“He’s been very respectful of me and of our country, but not so respectful of others,” Trump said. “That’s a man named Vladimir Putin, who I believe will be coming, depending on what happens.”

Source: Bloomberg

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Cryptocurrency

Political

The US Court of Appeals for the Second Circuit issued a mandate on Aug. 22 approving the dismissal of the appeals in the case between Ripple and the Securities and Exchange Commission (SEC).

The court order, shared by lawyer James Filan on X, officially ends one of crypto’s most consequential legal battles.

Despite the news, XRP’s price increased less than 1% within one hour, trading at $3.0694 as of press time.

The dismissal follows a joint filing on Aug. 7, in which Ripple and the SEC agreed to end their appeals after a formal Commission vote.

The agreement marks the conclusion of a dispute that began in December 2020 when the SEC sued Ripple Labs, CEO Brad Garlinghouse, and co-founder Chris Larsen for allegedly conducting an unregistered securities offering through XRP sales.

Legal battle concludes, ETF odds remain high

Under the settlement terms, XRP will not be classified as a security, representing a major victory for Ripple. Each side will cover its own legal costs, according to the court filing.

Ripple’s Chief Legal Officer Stuart Alderoty previously described the agreement as closing a chapter that has overshadowed the crypto industry for nearly four years.

The outcome places Ripple alongside other crypto firms like Coinbase that have successfully resolved enforcement actions with the SEC. Further, it removes regulatory uncertainty around XRP’s status, keeping the odds of approval of XRP exchange-traded funds (ETFs) high.

In February, Bloomberg ETF analysts Eric Balchunas and James Seyffart predicted 65% odds of approval for spot XRP ETFs in the US.

Polymarket bettors placed their odds of such an approval happening this year at 98% in early June, followed by a 10% slide after the SEC delayed decisions on multiple filings the same month.

Despite the sliding odds on the crypto-based prediction market, Balchunas and Seyffart raised their odds to “90% or higher” on June 20.

Polymarket traders continued to oppose the analysts, taking the odds to 62% in early August after the news that Commissioner Caroline Crenshaw opposed the approval.

However, Balchunas reiterated the high odds of approval of XRP ETFs: “Interesting, trades reporting how Polymarket odds of XRP ETF approval went down to 62% after the votes were disclosed showing Crenshaw voting no, but a) she’s gonna vote no on EVERYTHING and b) it’s meaningless, she’s outnumbered = we haven’t changed our odds, still at 95%.”