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Top Chinese State-Owned Banks Promote Digital Yuan Ahead of Shanghai 'Shopping Festival'

Some of China’s State-owned banks are reportedly promoting the country’s Central Bank Digital Currency (CBDC) initiatives ahead of a May 5 Shopping Festival in Shanghai.

The promotion of the CBDC, also known as the Digital Yuan (e-CNY) by the banks, is a political mandate designed as an alternative to Ant Group’s Alipay and Tencent’s WeChat Pay in China’s payment ecosystem, according to a Reuters report.

Bank officials who sued for anonymity have touted the e-Yuan as having features that made it as easy to use as the payment infrastructure provided by Alipay and WeChat Pay, both of which control over 94% of the Asian giant’s digital payments.

“People will realise that digital yuan payment is so convenient that I don’t have to rely on Alipay or WeChat Pay anymore,” the Reuters sources noted.

In a bid to truly combat the dominance of the two fintech giants, the report noted the e-Yuan may be handed freely to citizens or come with a huge discount that will encourage their sales. Many stakeholders are projecting the feasibility of the digital Yuan being widely used across China, citing its advanced security features.

“The e-CNY’s ease of use will likely be comparable to Alipay and WeChat Pay, while its security function will likely be higher, and as sophisticated as Bitcoin,” HSBC wrote in a recent report, adding that it expects the e-Yuan to “proliferate” within China.

Last year, the People’s Bank of China had conducted pilot tests in major cities including Beijing and Shenzhen, where it handed out over $1.5 million worth of the digital currency to citizens in the latter city. The aim was to test the retail capabilities of the CBDC, and the scheduled May 5 shopping festival may be an extension of the broader pilot tests designed for the Digital Yuan.

The race for CBDCs is heightening across the board on a global scale. Last week, the UK Government announced its CBDC Taskforce comprising of the HM Treasury and the Bank of England. Among many duties, the task force will help design a functional use case through which a digital Pound can be issued in the UK.

China's e-CNY is Growing, despite Local Payment Options Lack behind

The Digital Yuan (e-CNY), China’s Central Bank Digital Currency (CBDC) is growing at a fast pace as data released by Zou Lan, director of the PBoC financial markets department revealed the new legal tender has inked a total of 87.57 billion yuan ($13.68 billion) in transactions since public trials began, according to CNBC.

The performance figures released by the PBoC also showed that the total number of citizens that are now using the digital yuan has topped 261 million per a CNBC report. This user count is arguably favoured by the hosting of a newly released Digital Yuan wallet by the Chinese Central Bank on both the Google Play Store and the Apple App Store respectively.

While the transactions figures come off as impressive, it is by no means close to those of Alipay, one of the two dominant payment service providers operating in China. While the total transaction value of the e-CNY is pegged at 87.57 billion yuan, Alipay reported an average of 10 trillion yuan per month for the 2020 financial year.

Additionally, the monthly active users of Alipay pegged at 711 million people dwarfs the 261 million reported by the PBoC, and registered businesses on Alipay are over 80 million while businesses with a digital yuan wallet are just shy of 10 million.

While the fraction of the government’s new money made should be acknowledged, it is still a mile away from matching with local payment service providers. While competition from private cryptocurrencies like Bitcoin as well as stablecoins are already waded off when the country banned cryptocurrencies last year, the PBoC needs a more dogged strategy to onboard more users to use the e-CNY.

China has come a long way in perfecting the technical details surrounding its Digital Yuan currency, and with plans to permit foreign athletes to use the new money at the forthcoming Beijing Olympics, the PBoC wants to ensure all loose ends are tied with respect to its retail testing campaign.

$30m e-CNY Airdropped in Shenzhen to Boost Consumer Spending

The use of China’s Central Bank Digital Currency (CBDC) is currently being boosted by the city of Shenzhen, according to reports that the authority has airdropped 30 million Digital Yuan (e-CNY) to its residents.

According to the Shanghai Securities News, the airdrop was aimed at changing the resident’s consumer spending habits to be appropriately revitalized.

Per the report, the airdrop will be made or distributed through food delivery giant, Meituan Dianping, one of the private partners helping the Chinese government with the broad retail testing of the e-CNY. In order to receive the Digital Yuan airdrop, interested users will need to indicate interest in the program by signing up on the Meituan app, and applying for the incentive.

The final beneficiaries will be selected based on a lottery system, a trend which is common to Shenzhen and e-CNY airdrops. Successful residents will be able to spend the issued funds at more than 15,000 merchant stores that accept the e-CNY as payment for goods and services rendered.

The initiative from the Shenzhen city government is not the first of its kind as the officials continue to explore avenues to support the local economy amidst the growing incidence of lockdowns stirred by the Covid-19 pandemic.

The airdrop is also evidence that the CBDC from the People’s Bank of China (PBoC) is a very functional one and very close to a broad national launch. Despite the official launch date of the e-CNY not yet announced, a lot of accolades have been shared as the PBoC pushed for the new legal tender to feature at this year’s Olympic Games held in January. The CBDC also reportedly had transaction figures that surpassed records from international payment giants like Visa.

The report from Shanghai Securities News confirmed that previous airdrops like these are known to bolster consumer spending indeed, and expectations mount that this latest measure will also follow suit.

China Expands Digital Yuan Pilot Sites to 23 regions across 15 Provinces

The People’s Bank of China(PBoC) announced that it would expand the digital yuan pilot program from 11 regions to 23 regions in 15 provinces and cities.

Per the data released by Zou Lan, director of the Financial Markets Department of the People’s Bank of China, shows that the total transaction volume of digital yuan (e-CNY) in the pilot areas of 15 provinces and cities has reached 83 billion yuan ($12.315 billion) as of May 31.

The use of digital yuan (e-CNY) is growing rapidly. According to the data released by the People’s Bank of China, it also shows that the number of merchant stores using digital renminbi payments has reached 4.567 million. This data result is attributed to the successful appearance of the digital renminbi as a technology business card to the public during the Beijing Winter Olympics.

The new digital renminbi wallet launched by the People’s Bank of China is available on the Google Play Store and the Apple App Store, which is accessible to users in mainland China.

While the transaction volume is remarkable, it is nowhere near that of Alipay, one of China’s two major payment service providers. Alipay’s monthly active users are 711 million, far exceeding the 261 million announced by the People’s Bank of China. Alipay has more than 80 million registered merchants, while fewer than 10 million merchants have digital RMB wallets.

The use of China’s Central Bank Digital Currency (CBDC) is currently being boosted by the city of Shenzhen, which according to reports, has airdropped 30 million Digital Yuan (e-CNY) to its residents.

Zou said that the pilot test of digital CNYi will be steadily promoted, the pilot test will be expanded steadily and the number of e-CNY test sites will be increased and its technical capabilities will be improved.

While competition from private cryptocurrencies like bitcoin and stablecoins disappeared when the state banned cryptocurrencies last year, China’s central bank needs a more tenacious strategy to get more users to use the e-CNY.

Bank of China Launches e-CNY Smart Contract Product for Off-campus School Education

The Bank of China, in collaboration with the Education Bureau and financial authorities of Longquanyi District, Chengdu, has launched an educational electronic RMB smart contract prepaid fund management product, extending the pilot scope to school education, according to Chinese news media Sohu.com.

The product enables parents living in Longquanyi District, Chengdu City, Sichuan Province, China, to use the digital renminbi central bank digital currency for extra-curricular tutoring.

The bank said it would first be required to pay for private education, with a smart contract matching the deposit in proportion to the course. Parents also don’t have to worry about the risk of unspent refunds if they miss classes, as e-CNY payments are automatically credited to their accounts via smart contracts.

The Bank of China noted that the smart contract launch, dubbed “Longquan Education and Training,” aims to replace the role of regulators in monitoring payment transactions between parents and private education entities.

Bank of China says:

“Use the advantages of digital renminbi smart contracts to solve the financial supervision needs of training institutions, avoid the risk of freezing and deduction of training institutions’ accounts, and take advantage of the zero rates of digital currency to reduce the financial pressure of training institutions.”

Data shows that the digital yuan (e-CNY), the digital currency of the People’s Bank of China (CBDC), is growing rapidly. Since the public trial, transactions in the new fiat currency have totalled 87.57 billion yuan ($13.68 billion).

The use of China’s central bank digital currency (CBDC) has now airdropped 30 million digital yuan (e-CNY) to its Shenzhen residents in Shenzhen, aiming to change residents’ spending habits and make them properly rejuvenated.

According to reports, the airdrop or distribution will take place through food delivery giant Meituan Dianping. Meituan-Dianping is one of the private partners helping the Chinese government extensively test e-CNY in the retail sector.

China Central Bank Releases Digital CNY Smart Contract Prepaid Fund Management Product

According to the China Financial Association, the Digital Currency Research Institute of the People’s Bank of China has launched a digital renminbi smart contract prepaid fund management product – “Yuanguanjia”.

The product was launched to the public across the country at the 2022 Second China (Beijing) Digital Finance Forum held on September 8.

It aims to provide users with prepaid consumption service scenarios by deploying smart contracts on digital RMB wallets. A solution to prevent merchants from misappropriating funds and protect users’ rights and interests.

This product solves the problem that users avoid merchants running away with prepaid consumption and protects consumers’ rights and interests.

The company that released the digital renminbi smart contract prepaid fund management product-Beijing, Central Business District Xinlian Technology Co., Ltd., said that: “this model transforms prepaid consumption into instant consumption, further clarifies that the ownership of prepaid funds belongs to consumers, and ensures that prepaid funds are not was misappropriated.”

Last month The Bank of China, in collaboration with the Education Bureau and financial authorities of Longquanyi District, Chengdu, launched an educational electronic RMB smart contract prepaid fund management product, extending the pilot scope to school education,

As reported on August 25 by blockchain.News, the Beijing municipal government has announced a two-year (2022 – 2024) Metaverse innovation and development plan that will require all districts to follow the newly released Web3 innovation program guidelines.

China's Digital Yuan Has Topped Over $14 Billion in Transaction Volume

The Chinese Central Bank Digital Currency (CBDC) also known as the e-CNY has hit close to $14 billion (100.04 billion Yuan) from 360 million transactions as it gains widespread acceptance in the country.

The People’s Bank of China reported the news and that about 15 provinces have been selected as of August 31 to carry out the work of distributing the digital Renminbi (RMB) across10 institutions in various sectors such as healthcare, education, culture, and tourism.

The report also revealed that the e-CNY, which meets the public’s demand for mobile payments and provides safe and innovative payments for visitors from outside of China, was included at the 2022 Winter Olympics and Winter Paralympics in Beijing.

A number of e-government platforms have established the Digital Renminbi Payment Services, which encompass both online and offline channels to handle a variety of public utility payments. The e-CNY can also be used to provide tax refund money, special funds for monthly medical insurance payments, funds for helping persons in need, and “specific, special, and novel” Enterprise assistance funds.

The advantages of the e-CNY as a form of legal tender include trust, interoperability, and late development which is helpful in increasing transaction transparency and intelligent level of fund management while lowering settlement and compliance costs.

China is Accelerating The Digital Economy.

Even though the e-CNY doesn’t appear to have increased exponentially since the People’s Bank of China reported it had transacted over $12 billion (87.565 billion Yuan) in January, there is still hope that the number of transactions will rise before the end of the year as the digital renminbi pilot project is put into action.

The Bank of China recently introduced an educational electronic RMB smart contract prepaid fund management product, expanding the pilot’s focus to school education, in partnership with the Education Bureau and the financial authorities of Chengdu’s Longquanyi District.

China has kept up its impressive efforts in perfecting the e-CNY. The digital yuan app now enables users to use the e-CNY to pay for public transportation on 10 bus lines.

PBOC Governor Says Digital Yuan Will Prioritize Privacy Protection

Yi Gang, the Governor of the People’s Bank of China (PBoC) has reiterated that discussions on its Central Bank Digital Currency (CBDC) dubbed the Digital Yuan (e-CNY) are more centered on the privacy aspects of its operations to users.

Speaking at the Hong Kong Fintech Week, Yi said privacy protection is top on its list.

Coming off as one of the Central Banks with a vested interest in CBDCs, the PBoC said its e-CNY is mostly focused on retail domestic transactions as a major complement to cash in the digital world. In a bid to protect consumer privacy, it has employed a 2-tier system.

Yi Gang acknowledged that the PBoC facilitates inter-institutional transfers with banks under its jurisdiction in the first tier. At this stage, no customer information is collected. In tier 2, the banks distribute the e-CNY directly to consumers but obtain only the information that will enable them to stand right by the law.

Yi Gang noted that no entity will be able to probe a transaction without any rigorous legal permission, granting most users the safety they need to embrace the e-CNY.

“The PBOC ensures personal information security through advanced technology and strict management, with full adherence to consumer privacy protection laws and regulations. Transaction-related data is encrypted for storage,” Yi Gang said in the speech, further assuring that “Sensitive consumer information is de-identified to non-transacting parties. Entities and individuals are prohibited from arbitrary inquiry or information usage without rigorous legal authorization.”

China comes off as the world’s most advanced economy with a functional CBDC in circulation. While the digital legal tender has not been officially launched for everyone in the country to use yet, its retail pilot tests have been robust, with a presence in top cities, including Suzhou, and Shenzhen, amongst others.

Yi Gang said the PBoC has an active collaboration with the Hong Kong Monetary Authority (HKMA) as regards CBDC interrelationship and he said the bank is interested in creating other such relationships with other Central Banks around the world.

China expands digital yuan usage for cross-border trade

China is expanding the use cases for its central bank digital currency (CBDC), the digital yuan, also known as e-CNY, to promote cross-border trade in its Belt and Road initiative. The digital yuan was one of the first CBDCs to be developed and widely tested, with the government having expanded its testing parameter to include multiple cities and millions of people.

Xuzhou, a trade hub in Jiangsu province, plans to promote the use of e-CNY to pay for services and storage charges for goods carried by cross-border trains, according to a plan promoting the use of the Chinese digital currency in cross-border trade that was issued in the city. There are 18 regular cross-border rail connections from Xuzhou to 21 nations in Asia and Europe, making it an ideal location to pilot the use of e-CNY in cross-border payments.

The Hong Kong Monetary Authority (HKMA) is also testing the digital yuan as a cross-border payment tool in the Guangdong-Hong Kong-Macau Greater Bay Area. “The HKMA is working with mainland’s central bank, the People’s Bank of China, to test the digital yuan as a cross-border payment tool in Hong Kong,” said HKMA deputy chief executive Darryl Chan. The Chinese government hopes to improve efficiency and reduce the cost of cross-border transactions with these pilot projects.

Jiangsu province has been proactive in promoting digital yuan use cases, with Changshu, another city in the province, announcing that it will pay civil servants and people who work for public institutions using digital yuan. The Chinese government has ramped up its CBDC efforts at a time when the international trade markets are moving away from the standard U.S. dollar. Recently, China has completed multiple trade treaties with the likes of Russia and India based on their national currency over the U.S. dollar.

While the digital yuan has not yet been officially launched, the government’s efforts to test and expand its usage suggest that it is moving closer to a launch. The expansion of the digital yuan’s use cases for cross-border trade is part of a broader trend towards the digitalization of currencies, with other countries also exploring the use of CBDCs. China’s efforts in this area may give it a competitive advantage in the international trade markets, particularly as countries seek to diversify away from the U.S. dollar.

In addition to its use in cross-border trade, the digital yuan may also have implications for domestic payments in China. The Chinese government plans to use the digital yuan to reduce its dependence on the traditional banking system and to increase financial inclusion for those who are currently unbanked. The success of the digital yuan could also help China to expand its economic influence in the Asia-Pacific region and beyond, as other countries adopt its use in cross-border trade and potentially even domestic payments.

Bank of China Achieves Groundbreaking $14 Million e-CNY CBDC Settlement in Gold

The Bank of China has marked a significant milestone in the realm of digital currency with the completion of the world’s first cross-border Central Bank Digital Currency (CBDC)-powered precious metals deal. On December 20, 2023, the Bank of China’s Shanghai branch successfully conducted a 100 million yuan ($14 million) e-CNY CBDC settlement received overseas for gold via the Shanghai Financial Exchange International Board. This historic transaction underlines the growing acceptance and utility of digital currencies in international trade, especially in the precious metals sector.

The successful settlement showcases the strategic role the digital yuan, or e-CNY, is beginning to play in China’s international trade endeavors. Initially envisioned for domestic retail use, the People’s Bank of China (PBoC) and its partner banks have expanded the e-CNY’s scope to include international trade. This transaction follows the Bank of China’s recent facilitation of a $3.4 million digital yuan payment for iron ore, which was the first cross-border commodity deal using the e-CNY. The Bank of China is one of China’s largest commercial banks and was among the first banks to join the pilot program for the digital yuan.

The recent activities signify China’s accelerated efforts in integrating the digital yuan into the global financial system. Chinese President Xi Jinping has emphasized the importance of CBDCs in cross-border trade. The PBoC is actively exploring the use of e-CNY with Belt and Road Initiative (BRI) partner nations and Association of Southeast Asian Nations (ASEAN) members. Additionally, there have been developments in Singapore and Taiwan regarding e-CNY’s use. This cross-border settlement for gold is a clear indication of China’s intentions to position e-CNY as a key player in international finance.