China’s digital currency transactions exceed 100 billion yuan, central bank says

More than 5 million merchants now accept digital yuan in 15 Chinese regions, as Beijing continues to expand pilot areas.

People’s Bank of China reports 360 million digital currency payments

Transactions with the central bank of China’s digital currency (CBDC) exceeded 100 billion yuan in value ($13.9 billion) as of Aug. 31, 2022, up from nearly 88 billion yuan at the end of 2021, the People’s Bank of China (PBOC) announced Wednesday. The spending involved 360 million transactions, according to a Reuters report citing the monetary policy regulator.

The data was released as financial authorities in the world’s most populous nation continue to roll out the digital yuan (e-CNY) and steadily increase its trial coverage. The CBDC has been introduced in 15 provinces and municipalities, and 5.6 million merchants now accept the digital version of the Chinese yuan.

Pilot areas have seen nearly 30 rounds of e-CNY this year, often distributed through red envelope campaigns, such as the one in Shanghai last spring, where $4.5 million in digital yuan was distributed. These initiatives are aimed at stimulating consumption, combating the negative effects of the Covid-19 pandemic and promoting low-carbon transportation, the PBOC noted.

Although the digital yuan has so far been used mainly for domestic and retail payments, Beijing intends to introduce it in the corporate and financial, tax and government affairs sectors as well, the central bank said. It also wants to connect its platform to traditional digital payment systems such as Alipay and Wechat Pay, and recently called for a wider range of usage scenarios.

Expansion of cross-border payments with e-CNY is also planned. The People’s Bank of China recently participated in the international settlement trial with several CBDCs, as well as the monetary authorities of Hong Kong, Thailand and the United Arab Emirates, a project coordinated by the Bank for International Settlements (BIS).

Steps have been taken to connect the digital yuan infrastructure to the local digital payment system in Hong Kong. China’s special administrative region is preparing to test its own CBDC. The pilot phase of the Hong Kong digital dollar, called e-HKD, is expected to begin by the end of the year and comes after public consultations on the subject.