While China has not advocated for using cryptocurrencies within its borders, it has made substantial progress toward its central bank digital currency (CBDC). However, in a recent revelation, there has been disappointment concerning digital Yuan, its CBDC.
Addressing a recent university conference, a former official of the People’s Bank of China (PBOC) expressed his dissatisfaction with the stats of digital Yuan usage in the nation.
The PBOC is the country’s central bank, and the comments above came from its former research director, Xie Ping, currently a finance professor at Tsinghua University.
Reporting figures, Ping mentioned that as of October, the cumulative digital Yuan transactions had only crossed over 100 billion Yuan ($14 billion). He also said that October marked two years of the launch of the CBDC, and hence “the results are not ideal.” In addition, Ping commented that the “usage has been low, highly inactive.”
The Chinese government has been trying various methods to promote the rapid expansion of the trials and new wallet features to lure users. However, a report published by the central bank in January stated that only 261 million users had set up an e-CNY wallet.
This is compared to around 903.6 million people who utilize mobile payments in the country, per a 2021 China UnionPay report.
To foster the usage of digital Yuan, Ping suggested that the use case of e-CNY “needs to be changed.” The use case should be changed from its currency use as a cash substitute and be opened to other uses like being able to pay for financial products or be connected to more payment platforms, thus eventually boosting the adoption.
Further, Ping compared the digital Yuan and other third-party payment systems prevalent in the country, like WeChat Pay, Alipay, and QQ Wallet. Reportedly these platforms also allow investments, lending, or loans. He highlighted that these platforms “have formed a payment market structure that has met needs for daily consumption.”
Sources reveal that some third-party financial applications are compatible with supporting digital Yuan but see very little use. Ping pointed this out as he said, “people are used to” using the original service, and change “is difficult.”
Given the authoritarian regime in China, such criticism of government initiatives from former officials is a very rare instance. Nevertheless, it indicates that the nation might be seriously struggling to gain attention for its CBDC initiative.
The Chinese government has been in pursuit of rapid expansion of e-CNY trials. In April, Todayq News reported that 5 million yuan or $2.27 million were announced to be distributed to local citizens in digital form (e-CNY). In addition, as per reports, around 130,000 red packets were to be distributed through a lottery via Wechat payment. Furthermore, around 5,000 stores accepted the e-CNY without absurd requirements like minimum purchase.
In December, the government expanded the trials to four new cities and expanded in September to Guangdong province, its most populous, and three others.
A few days ago, new features were also added to the digital Yuan wallet app to attract users ahead of the Chinese New Year. This is expected to add functionality to send digital versions of the traditional red pacts or red envelopes containing money. Sending money in red packets during festivities has been a traditional method for ages.