In 2019, China began piloting its central bank digital currency, known as the e-CNY. After a slow start, uptake has accelerated rapidly, with 26 cities serving as test beds and 5.6 million merchants registered to use the currency nationwide as of last year. Its implementation has gone into overdrive in 2023. Former People’s Bank of China (PBOC) Governor Yi Gang said in July that total transactions had reached CNY950 million with a cumulative value of CNY1.8 trillion by the end of June, up from CNY100 billion the previous August. With 120 million wallets opened and its potential utility in expanding the overseas adoption of Chinese currency, countering the risk of Western sanctions and chipping away at U.S. dollar dominance, the digital yuan is poised to see even greater promotion in the years to come.
From September, foreigners in China can sign up for an e-CNY wallet using their international phone number, top up with their overseas Visa or Mastercard cards, and transfer their wallet balance back to their offshore accounts. Overseas users can use the wallet at offline stores that display e-yuan acceptance signs, and on popular Chinese platforms like Meituan and Ctrip. Jiangsu province is promoting the digital yuan by incorporating it into the payment of salaries for civil servants and people who work for public institutions in cities like Taicang, Xuzhou and Changshu. Xuzhou unveiled a plan in April to incorporate the digital yuan into the operations of Europe-bound freight trains linked to the Belt and Road Initiative (BRI), enabling payments for services and storage fees related to transported goods. In May, Suqian set a target to make the e-yuan a primary settlement method for local public institutions by the end of 2025, with plans to adopt digital yuan wallets for government units at all levels.
In January, China’s e-CNY app introduced a new function that enables users to make payments without a charged phone or an internet connection. Users can preset the number and value of payments and complete transactions by tapping their phones with the cashier’s device, even when their phones are out of battery or lack a signal. This function is currently only available on some Android phones. Starting from July, users can make payments without a phone network or power by using SIM cards as the payment medium.
The PBOC’s Digital Currency Institute joined an e-yuan platform, known as the mBridge, with four other central banks in 2021. Other mBridge members are the Central Bank of the United Arab Emirates, the Bank of Thailand, the BIS Innovation Hub Hong Kong Center and the Hong Kong Monetary Authority (HKMA). The mBridge is designed to accelerate the use of e-yuan for international settlements, slash processing fees for cross-border fund transfers and provide emerging markets with an affordable gateway into the global financial network. In June, the five partners discussed the platform’s Minimum Viable Product development and landing phase during a meeting in Beijing. They intend to create a practical prototype that could efficiently assess the e-yuan’s potential in unknown markets with minimal cost. In September, Tencent became one of the organizations selected to take part in the piloting phase of the mBridge project, the China Daily reports.
