According to local media reports, Changsha, a Chinese city has set a new milestone in the adoption of central bank digital currencies (CBDCs). The city is located in Hunan Province and was added to the pilot in April 2021.
Changsha is located in central China and is one of the most populous cities in the country. Over 10 million people live in the city itself and many more reside in the surrounding Greater Changsha Metropolitan Region.
Sources reveal that more than 420,000 merchants are currently accepting payments in the Chinese CBDC. The city’s increasing rate of CBDC adoption is noteworthy. In February this year, the city authorities said that 300,000 merchants in the city were processing digital Yuan payments and within 2 months the number had taken a significant surge, increasing by 120,000.
As per the officials, the reported number of digital Yuan wallets in the city, which stands at 22 million, only includes physical businesses and not online vendors. In addition, the city has stated that 800,000 “public” wallets have been opened for use by firms and government organizations based in Changsha.
In total, since the digital Yuan pilot began, there have been approximately 62 million transactions in the city. According to officials, the total value of these transactions was over $1.4 billion. Considering the massive participation of one of the largest Chinese cities, it is clear that the nation is actively advancing in its pursuit of CBDC.
According to the data released by the People’s Bank of China (PBoC), the “popularity” of mobile payments reached the 90% mark last year. The PBoC has begun cross-border pilots with Hong Kong and Macau, which will allow Beijing to test the CBDC in international markets.
Although Hong Kong is officially part of China, it retains a separate economic system. This system is linked to Western and other Asian economies. Macau also has a separate currency and economic system.
Chinese cities are found to be rapid in their adoption of CBDCs and are in complete support of the nation’s CBDC project. Several cities had announced huge giveaways to boost the adoption in their respective regions. Todayq News reported that the Suzhou authorities aim to achieve the goal of digital Yuan transactions involving residents and enterprises, with the targeted value projected to grow six-fold.
However, the case with CBDCs is not equal across the globe. Nigeria, an African nation, has been struggling with its CBDC endeavors. In the case of the United States, the digital Dollar project is under immense scrutiny for privacy concerns. Interestingly, now the issue seems to be bipartisan despite the imminent divide in political ideologies.
Nonetheless, CBDCs are expected to be an integral part of the global economy in the coming time. A few days back, the president of the European Central Bank (ECB) also said that the banks might lose their relevance in the future if they fail to keep up with the increasing CBDC fame.
Moreover, intergovernmental organizations like G7 have also prioritized the development of CBDCs in their agenda. Notably, the members are willing to offer help to developing nations in working out their CBDC projects.