Milestone of China’s CBDC Growth: 180 Million Wallets and Widening Transactions
By July 2024, the CBDC of China, e-CNY, has recorded 180 million personal wallets and enabled ¥7.3 trillion ($1.02 trillion) in transactions. This is a testament to the relentless effort put forward by China in upgrading its financial systems through the adoption of digital currency, which is an important part of its ongoing pilot program.
CBDC Widens Functions, Transaction Means
Mu Changchun, head of the People’s Bank of China’s Digital Currency Research Institute, detailed in an October report how China’s CBDC, otherwise known as “digital RMB,” is flexing into the digital economy. The app allows for this flexibility because it uses the account model, with the app integrated with traditional bank accounts, but also permits the value model, enabling blockchain payments in coin strings.
This flexibility of transactions across multiple ecosystems includes offline conditions where there is no need for electricity or the internet. Recent enhancements further enable the making of payments through the use of QR codes, SIM cards, and even in cases of dead batteries to expand on the CBDC utility.
New Integrations to Public Services
For added utility, China is extending the use of its digital RMB into public utilities such as transport. Buses, subways, among other services, now accept digital RMB-a move believed to increase the adoption rate among its citizens.
Challenges and User Reluctance
Yet, despite all these advances, several concerns still remain. According to a report from the South China Morning Post, bank account manager Sammy Lin, and users like him, remain unwilling – or unable – to fully embrace the digital yuan. The main issues include a lack of interest-earning potential in digital wallets and the traceability and privacy concerns associated with it.
Still, many prefer traditional cash and immediately convert all their digital yuan back to avoid potential risks, while China continues to improve security and functionality.
Global CBDC Race: China in the Lead
The PBoC leads the race in the global CBDC with 134 countries now considered to be developing central bank digital currencies, up from 35 in 2020. Other significant economies like India, Brazil, and Australia are well underway in testing their own versions of digital money.
As China strives to iron out adoption challenges, innovations within the digital currency space will be key towards shaping the future path of global finance.
