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Though backed by the government, the e-CNY still has a long way to go in dominating the digital payment ecosystem in China.
China’s Central Bank Digital Currency (CBDC) or e-CNY is gathering massive traction for a project that is still in its advanced trial phase with over 87.57 billion yuan ($13.68 billion) recorded in all-time transactions as unveiled by Zou Lan, director of the PBOC financial markets department.
As reported by CNBC, China’s e-CNY project recorded 53.1 billion yuan ($8.3 billion) in the second half of 2021. These figures are complemented by a growing number of users who are now utilizing the digital yuan for payments across the board. While the trials for the digital yuan which commenced almost 2 years ago kickstarted based on a lottery system, the People’s Bank of China (PBoC) stepped up its drive by launching a wallet for the digital yuan last year.
As reported by Coinspeaker, the Digital Yuan wallet ranked as the most downloaded application in China back in December, and it has now been hosted on both the App Store and Google Play Stores for public downloads. With the digital yuan now opened to a broader part of the public, the total number of digital yuan users has topped 261 million as of the end of 2021, an increase of 240.13 million from the end of June, according to data released by the PBoC.
China’s e-CNY and the Private Sector Competition
The impressive growth of transactions for the digital yuan looks dwarfed when a comparison is made with Ant Group’s Alipay, one of the dominant payment processors operating out of China. While the all-time transaction growth of e-CNY is pegged at 87.57 billion yuan, Alipay disclosed back in 2020 that its monthly payment volume averaged 10 trillion yuan.
As of June that same year, the payment giant said it has over 711 million active users registered on its platform, a figure that dwarfs the 261 million associated with the e-CNY. With businesses now officially accepting digital yuan, the PBoC report indicated that as many as 10 million businesses now have a digital yuan wallet, a figure that compares with over 80 million merchants registered on the Alipay app.
Though backed by the government, the e-CNY still has a long way to go in dominating the digital payment ecosystem in China. While the government has reiterated that the CBDC is not aimed at competing with existing payment solutions, but rather to complement it, a more proactive incentive has to be introduced to encourage more citizens to make use of the new currency.
The government has already taken a step in banning Bitcoin (BTC), and other cryptocurrency-related activities including mining, and trading on its shores, a move that is aimed at stemming competition from more aggressive and volatile nascent asset classes. With no timeline in view for its official national rollout, China’s e-CNY is arguably the most advanced CBDC for a major economy.