Tuesday, 25 July 2023

People’s Bank of China governor says DIGITAL YUAN used in nearly $250B worth of transactions over last 18 months

The governor of China's central bank has declared that almost $250 billion worth of transactions have been carried out using the digital yuan in the one-and-a-half years since the beginning of its pilot launch.

Although the acceptance and use of China's central bank digital currency (CBDC) – officially called the digital renminbi or the e-CNY – are broadening, the digital yuan comprises only around 0.2 percent of China's monetary supply. The $250 billion in digital yuan transactions constitute over 70 percent increase from the figure the bank mentioned in August 2022.

This information comes from People's Bank of China Governor Yi Gang who disclosed the latest statistics on China's central bank digital currency (CBDC) on Wednesday, July 19, during a conference in Singapore.

Yi said that at the end of June, the central bank had transacted 1.8 trillion yuan worth of the CBDC. He added that there have also been around 950 million transactions using the digital yuan from roughly 120 million wallets since the CBDC's initial January 2022 rollout, with an average transaction value of about $260, or roughly 1,800 yuan.

The People's Bank of China first launched pilot trials for its digital currency at the end of 2019, and has been conducting trials in various cities across China, including in Suzhou, Shenzhen, Xiongan and Chengdu – with a total population of nearly 40 million.

The local government units of these and many other cities have since then begun implementing the use of the digital yuan in everyday transactions. In the city of Jinan, the digital yuan is being used to pay for public transportation fares.

In Shanghai, the financial hub's clearing house – the institution where the exchange of payments, securities and derivatives transactions is facilitated – is now accepting settlements using the digital yuan.

Meanwhile, the Bank of China – the fourth largest bank in the world – has expanded digital yuan testing to SIM cards and NFC payments.

Digital yuan's adoption still very low but growing fast

Yi noted that about $2.3 billion worth of digital yuan – approximately 16.5 billion yuan – was in circulation at the end of June. This represents just 0.16 percent of China's monetary supply.

"Right now, the balance of e-CNY is only counting two-tenths of one percent of M0 [monetary base], so the balance is very small, but with this kind of balance [we] support a big number of transactions, which means that the velocity is high and more efficient," said Yi.

The digital yuan's acceptance and use is still very minuscule, with the digital yuan still only being used for domestic retail payments, aside from several trials being conducted in Hong Kong. This trial, allows Bank of China customers to use the digital yuan at their preferred retail stores in Hong Kong.  

The test was rolled out in a bid to further promote the cross-border applications of digital yuan and was the third cross-border trial of the CBDC in Hong Kong.

In a test last year, the Bank of China Hong Kong started a program that encouraged customers to install a Bank of China e-CNY wallet to receive 100 yuan ($14) to be used in the Hong Kong supermarket chain U Select.

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