China’s digital yuan initiative reached a new level of global visibility during the Beijing Olympics as the country used the international event to showcase its central bank digital currency in a real-world environment. The e-yuan, which has been piloted across multiple Chinese cities since 2019, is now being used by millions of consumers and accepted by millions of merchants throughout the country. While the Olympic rollout remains relatively limited in scope, the event highlights China’s continued leadership in retail CBDC development and underscores growing global debate around digital currency technology, privacy concerns, and the future role of central bank-issued digital payments.
This posting in Business Insider India provides information on the e-yuan use at the Beijing Olympics, which is the CBDC that has been piloted in China for more than a year in various cities. The article indicates that more than the equivalent of $300,000 is being spent each day at the Olympics using the e-yuan. Likely most of this usage is limited to the Olympic workers and Chinese athletes, as well as the few attendees allowed in. Many readers who follow CBDCs will know that China has been leading the global pack in usage of a central bank digital currency, which has been in use since 2019-2020 in a couple of Chinese municipalities, and they were looking to showcase it at the Olympics, which to a limited extent they have.
‘Earlier in January, China had released smartphone apps to receive and spend the new digital currency from mobile phones, which serves as a software wallet. By the end of 2021, the country reported 261 million users of the CBDC, eight million merchants who accept it, and transactions worth almost $14 billion… The CBDC trials began small, but now the CBDC pilot stage has been expanded to be used in 11 designated cities, including Beijing itself.’
The posting suggests that the e-yuan is based on blockchain, which contrasts with the recently published Phase 1 testing results released by the Federal Reserve of Boston, which described two models, neither of which had blockchain as the underlying technology. So we’ll see where that goes. In the meantime, the ‘privacy’ concerns remain at the forefront from external parties when discussing the e-yuan, which of course provides a means for monitoring financial activity on the part of users. The e-yuan is only a retail play, which is where we would expect most CBDCs to remain for some time.
‘China’s CBDC is said to be based on blockchain, and the country has even stated an official interest in blockchain-based digital innovation. Yet, the country banned decentralised cryptocurrency mining and transactions in September 2021, despite being home to the most Bitcoin miners at the time, according to CCAF… Yi Gang, the governor of China’s central bank has previously spoken about balancing the need for privacy with crime prevention. He has also said the CBDC will focus on domestic retail payments for now, as “cross-border digital payments involve more complicated issues, such as anti-money laundering.”’
Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group
