On the heels of the Fed releasing last week’s ‘discussion document’ on the issuance of a digital dollar, we have this piece from Cointelegraph that describes the contrasting developments with the e-CNY (digital yuan) in China. The Chinese CBDC has been under active field testing conditions for about two years and has a relatively wide distribution across Chinese merchants. In this case, the high tech food delivery company Meituan (think getting your food delivered by drone) is adding the digital yuan to its payments acceptance menu.
‘Meituan users can link the digital yuan wallet to their service app and use it for a range of daily services such as booking hotels, cabs and paying at restaurants. The food delivery and daily services app recorded 660 million transacting customers last year, and the integration of e-CNY payments would only help the Beijing government to test its sovereign digital currency more widely…
Over the past few months, major tech giants in the country such as WeChat and JD.com have joined the mass retail testing of e-CNY.’
We do not know the intimate details of how the People’s Bank of China (PBOC) interacts with commercial banks in this setup (or even the fundamental restrictions, if any), and we don’t recall seeing a discussion guide and request for commentary in getting the e-CNY launched in 2019. That’s just not how things work there. More will eventually come out, but also keep your eye on various other retail CBDC uses in other comparable markets as they roll out (Australia, Brazil, France, Sweden, etc.).
‘Zou Lan, director of the PBOC’s financial markets department has said that the cumulative transactions in e-CNY have reached 87.57 billion yuan ($13.68 billion). By the end of October 2021, nearly 10 million merchants had activated digital yuan wallets…
China is currently at the top of the CBDC game, having started the development for the same as early as 2014. While 91 nations have started their CBDC development, only a handful have reached the pilot phase including China, South Korea, Switzerland and France. The United States is currently in the discussion phase and lawmakers weighing in the pros and cons of a sovereign digital currency.’
Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group