e-CNY volumes ‘a drop in the bucket,’ says ex-PBOC official
A former official of China’s central bank described the usage volume of e-CNY – also known as the digital yuan – as a drop in the bucket compared with transactions conducted through the country’s dominant mobile payment systems.
Xie Ping, the former director General of Research at the People’s Bank of China (PBoC), said large investments in technology are required to promote the country’s Central Bank Digital Currency (CBDC). He expressed dissatisfaction about the progress made two years after launch, citing e-CNY’s limited turnover to just a few billion dollars.
Ping noted that the expansion of the pilot program faces challenges as Chinese consumers are already used to the convenience of Alipay and WeChat Pay.
“The cumulative circulation of the digital yuan in the two years of the trial has been only 100 billion yuan ($14 billion). The results are not ideal, and usage has been low, highly inactive,” he said while speaking at a conference organized by Tsinghua University.
Ping added that achieving the payment processing capacity required to handle massive volumes of transactions will need billions to build data centers, servers and bandwidth.
To tackle the issue, the former banker says the challenge now is how to improve the e-CNY’s use and stickiness with users and merchants. In the next step, the central bank will promote deeper e-CNY integration for the public and for personal business.
Currently, the e-CNY is being tested in 23 cities and regions in 15 provinces and provincial-level cities. However, officials say that the main purpose of the pilot program for the time being is to build confidence in the digital yuan’s reliability and ease of use.
China had more than 360 million e-CNY transactions, with a total volume topping 100 billion yuan ($14 billion) as of October 10, People Bank of China (PBoC) said on its official WeChat.
A total of 5.6 million commercial outlets across the country now accept digital yuan as a payment option. However, the growth figure was relatively modest when compared to the virtual currency’s transaction volume for the entirety of 2021, which reached 87.6 billion yuan ($13 billion).
Even though the e-CNY is now the most widely adopted CBDC in the world, the transaction volume grew by only 14 percent from a year earlier.
The PBOC said it will continue to expand the scope of its pilot programs, develop more trial scenarios, and bolster international cooperation for the digital yuan.
