China’s central bank, the People’s Bank of China (PBoC), disclosed an impressive $250 billion in transactions executed via the national Central Bank Digital Currency (CBDC), named digital yuan. The operations spanned 18 months from inception to the end of June, rendering the modern currency’s adoption nothing short of remarkable. Contrary to many expectations, a mere 0.16% of China’s currency supply is represented by the 16.5 billion digital yuan in circulation.
Governor Yi Gang disclosed the details, remarking on the nearly 950 million transactions carried out using roughly 120 million wallets, collectively. Each transaction averaged out to approximately $260. Consistent and exponential uptake of the digital currency is highlighted by the 70% growth in digital yuan transactions compared to figures disclosed in August 2022.
Considerably, the PBoC and China’s government have shown unwavering commitment to stimulate its CBDC’s adoption. Their strategies have primarily focused on extending its uses rather than limiting them to mainland China. As an example, bank-backed initiatives such as the Bank of China Hong Kong’s shopping festival – aimed at boosting digital yuan use among mainland travelers – added cross-border application of the CBDC to the use cases list.
Additional incentives have been implemented to engage users, such as digital red packets worth 100 yuan for creating a BOC e-CNY wallet. The smart contract functionality introduction, predominantly via the popular Meituan retail and food delivery app, further broadened the digital currency’s scope.
Even the securities sector is not lagging in embracing the digital yuan, with reports in January suggesting that for the first time, it was used for securities purchases. These operational strides promise even more potential for extended digital yuan use, given suitable infrastructure and legal framework.
Conversely, the CBDC’s ballooning use does have its demerits, mainly the less-than-satisfactory 0.16% of the national money supply that digital yuan currently signifies. Despite reaching an impressive transactional milestone, the utilization rate and overall reception of the currency within China’s vast economy appears somewhat limited.
In conclusion, while other countries grapple with the concept, launch, and subsequent adoption of their own CBDCs, China’s head start in the crypto race has led to significant leaps and bounds. Yet, it remains to be seen whether these advancements ultimately translate into a wholesome CBDC experience for the Chinese populace and global economy at large.
Source: Cryptonews
