China’s Central Bank Processes Over 3.1 Million Transactions in National Digital Currency

UTC by staff writer · 3 min read
China’s Central Bank Processes Over 3.1 Million Transactions in National Digital Currency
Photo: Depositphotos

The Central Bank of China has researched over 6,700 use cases for its CBDC and wired more than 5000 payments in the national digital currency to healthcare workers to boost the fight against the coronavirus.

Fan Yi Fei, the People’s Bank of China deputy governor, has revealed that so far, China’s Central Bank has processed more than 3.1 million the state-run digital currency transactions worth 1.1 billion Chinese yuan Renminbi (USD$162 million) between April and August as a part of its pilot trial of the Central Bank Digital Currency (CBDC). While presenting a speech at the Sibos 20020 virtual conference event on September 5, Fan Yi Fei, stated that China’s central bank has managed to open an estimate of 8,859 corporate digital wallets and 113,3000 consumer digital wallets for residents living in Xiong’an, Suzhou, and Shenzhen as an effort to test the national digital currency.

PBOC Sees More Use-Cases for National Digital Currency

The deputy governor said that the central bank has researched more than 6,700 various applications for a national digital currency, including shopping, government services, bill payments, transportation, hospitality, retail, catering services, as well as use cases like barcode scanning, payment, facial recognition, among other technological applications.

Fan further stated that over 5000 healthcare workers in Shenzhen’s Luohu district have obtained “red envelops” filled with the digital version of yuan currency to help in the fight against the COVID-19 crisis. The medical workers can spend these digital currencies in particular shops and business premises within the district.

The digital currency’s application in tourism would be examined in the future pilot tests in Beijing, the country’s capital city, in the 2022 winter Olympic games. The central bank talked about such plans in April when it stated that Chengdu, Xiong’an, Suzhou, and Shenzhen were selected as the first settings to conduct the DCEP trials.

The trial tests have been developed to reach other cities such as Beijing, Macau, Hong Kong, the province of Guangdong, Hebei, and Tianjin, and the Yangtze River Delta region. In August, the country’s Ministry of Commerce stated that the government is contemplating to launch other trials in the western and central regions of China in the near future.

China’s CBDC Compete to Gain Competitive Advantage

China’s national digital currency, commonly recognized as DCEP, is a component of a longstanding program that China’s government launched in 2014. It is an initiative that the government aims to utilize crypto technology to develop geopolitical strength, bypass trade networks, and modernize payments.

Fan said:

“To protect fiat currency from crypto-assets and safeguard monetary sovereignty, it is necessary for the central banks to digitize bank notes through new technologies.”

China aims to gain a competitive edge of the development of CBDCs and utilize them as an instrument to help to accelerate the transformation of the nation’s economy. Its testing of the CBDC is ahead of other central banks where the proposed digital currencies are majorly in the decision-making stage.

China’s central bank banned cryptocurrency trading, claiming that they are a potential threat to the country’s financial stability. The CBDC is set to give the central bank the capability of tracking and tracing economic activities in real-time.

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