By
Tolu Ajiboye
April 17th, 2024
While the e-CNY is billed to offer almost the similar features as stablecoins, it is centralized in nature.
The plans by the People’s Bank of China (PBoC) to develop a functional Central Bank Digital Currency (CBDC) dubbed Digital Yuan (e-CNY) is advancing at a fast pace with largely successful trials being conducted thus far. According to a report from Reuters, citing Mu Changchun, the director-general of the digital currency institute of the People’s Bank of China, the Digital Yuan project has recorded a total of 62 billion yuan ($9.7 billion) in transactions thus far.
The race to develop a government-backed and issued CBDC remains a top agenda for most Central Banks around the world today. From the utmost ambition to stump the growth of privately issued cryptocurrencies and stablecoins for transactions, to the need to facilitate a faster and cheaper payment system, more than 110 countries are reportedly deeply invested in the development of their own digital currency.
As of today, only a few countries have been able to officially launch a CBDC including the Bahamas and Nigeria. However, the Digital Yuan project from the Chinese government is the most advanced of all major economies exploring such CBDCs today. The government has been involved in a number of pilot tests, and at present, over 140 million people have opened Digital Yuan wallets.
While Changchun re-confirmed that no official date has been announced for the launch of the e-CNY, its integration amongst retail businesses is growing at a very fast pace. As many as 1.55 million merchants in the Asian country now have the capabilities to accept payments using e-CNY wallets. Amongst the things, the currency could be used to include payment for utilities, catering services, transportation, retail, and government services.
Preparing the Way for the Digital Yuan
The advocacy for healthy competition in the financial market may hold through, but apparently, this seems not to apply to the Chinese government and the People’s Bank of China. With cryptocurrencies notably offering the right model of speed, efficiency, and stress-free payment models, the government has done everything within its powers to stump the rate at which Bitcoin and altcoins thrive in the country.
By first dealing a blow through a massive crackdown on crypto mining operations in the country, a development that pushed many Bitcoin miners off the Chinese shores, the PBoC revealed back in the third quarter that all transactions involving digital currencies are prohibited. By virtue of this declaration, trading platforms including Binance, FTX, and Huobi Global are overseeing a phased shutdown of their operations in mainland China.
These developments all point to one fact, that the PBoC wants a soft landing for its Digital Yuan CBDC and the ensuing transactions when launched, devoid of every form of competition from established cryptocurrencies.
While the e-CNY is billed to offer almost the similar features as stablecoins, it is centralized in nature, and in direct contrast to the decentralized handling for private digital currencies. This may serve as a drawback or a red flag for some citizens who are aware of the potentials of Bitcoin.