Digital yuan usage soars, says PBOC
10 Nov 2021
Digital yuan transactions in China hit 62 billion Yuan ($9.7 billion) by 22 October, despite limited trading scenarios, according to analysts. Speaking at ‘Hong Kong Fintech Week 2021’ director of the Digital Currency Research Institute of the People's Bank of China (PBOC), Mu Changchun, said that 140 million digital yuan personal wallets and 10 million corporate wallets have been opened. "The total number of transactions reached 150 million, and the transaction volume was close to 62 billion yuan," Mu said. Although the stats are positive, more needs to be accomplished in order to increase the usage levels of the digital currency. Director of the Finance and Securities Institute of Wuhan University, Dong Dengxin told the Global Times: "The 62-billion-yuan transaction volume is by no means big, especially given the context of over 100 billion in transaction volume during the Double 11 online shopping festival.”
The principal reason for the comparatively low transaction volume relates to few occasions for transactions. In addition, Dong added that the cumulative transaction scale isn’t that large as digital currency mainly replaces cash. Major players such as Alipay and Wechat Pay have already undertaken cashless transactions. Moreover, another explanation as to the digital yuan’s relatively low transaction volume is that the current circumstances for using yuan are limited, but will increase in the future.
Digital yuan accounts
There are four types of accounts for digital yuan users. In the lowest tier, a customer just requires a phone number, making transactions anonymous, even to the central bank. This wallet is limited to 5,000 yuan for daily transactions and 50,000 yuan annually. At the other end of the scale, there’s no transaction limit on the highest privileged e-CNY wallet, and it can only be opened at a bank. Verification details are mandatory. People's Bank of China governor Gang Yi stated: “We are taking a high degree of focus on issues surrounding the security of personal information and the digital yuan and have made relevant regulatory and technological adjustments to meet this objective. We have adopted a principle of anonymity for small transactions regarding the digital yuan and will only step in to regulate under the law for large transactions. When it comes to collecting personal data, we seek only to collect what is necessary and the minimum of what is legally required, which is far less than electronic payment apps of today.”
PBOC pilot programs
The People's Bank of China has been carrying out pilot experiments for using the digital yuan since the end of 2019. The tests were undertaken in numerous locations, including cities such as Shenzhen and Suzhou and Xiongan New Area. As it stands, 1.55 million merchants support digital yuan wallets in industries such as catering, transportation and public utilities.