The digital yuan was launched in early 2021, and since then, users have made $13.78 billion transactions through e-CNY service.
The Central Bank of China is actively promoting the state cryptocurrency (CBDC) among the population of the country. According to the agency, the e-CNY mobile application, through which digital yuan is distributed, has already registered a fifth of China – more than 261 million people.
The digital yuan is China’s state-owned cryptocurrency, designed to digitalize the economy. The project is in many ways similar to bitcoin and other virtual currencies, however, the key difference is that e-CNY is issued and fully controlled by the Central Bank. The Chinese government claims that the digital yuan has the same benefits as decentralized currencies.
Over the past two years, China has been testing the currency in several formats. First, state regulators teamed up with IT companies and launched a series of sweepstakes where any Chinese citizen could win a new type of money to spend in online stores. After some time, CBDC also extended to officials – they began to receive part of their salaries and subsidies in digital currency.
In January 2022, the People’s Bank of China created the e-CNY digital wallet, a banking service for converting real yuan into digital yuan, and uploaded it to the regional versions of iOS and Android app stores. Over the past year, the e-CNY provider has gradually expanded its user base by sending invitations to connect to algorithm-approved people across China. As a result, in less than a year, the audience of the digital wallet reached 261 million users – participants in the state program received access to 8 million “pilot use cases”, such as shopping on the Alibaba website or paying for taxi rides from Didi.
With the digital yuan, the Central Bank of China pursues several goals at once, including the transparency of all payments. But first of all, the PRC authorities want to turn cryptocurrency payments into the main circulation of money within the country’s economy. In particular, the government wants to diversify the forms of cash provided to the public, meet the demand for digital money, and support financial inclusion. The digital yuan should also promote competition in the private sector and the security of any type of transaction.
The Central Bank of China will continue to promote pilot testing and develop infrastructure for the digital yuan. The bank plans to focus on promoting the state cryptocurrency in retail transactions, payment for healthcare services and other industries.