China’s Digital Yuan Is Underused, Says Former Central Bank Official CryptoGlobe

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Trials of the digital yuan produced disappointing results, according to a report quoting the former head of research at China’s central bank. The new form of national fiat has brought no benefit to banks and should expand beyond being used only as a substitute for cash, the banker believes.

Ordinary people used to cash and cards, ex-PBOC executive notes

The use of China’s central bank digital currency (CBDC) has been low, very inactive, according to Xie Ping, former director general of research at the People’s Bank of China (PBOC). Ping made this observation during a conference devoted to digital finance.

The cumulative circulation of the digital yuan during the two years of the trial was only 100 billion yuan ($14 billion), he detailed, quoted by financial media Caixin and Reuters. According to him, the application of the digital yuan should be expanded.

The results are not ideal, Xie concluded at the forum hosted by Tsinghua University. He pointed out that what needs to change is that the digital yuan only acts as a substitute for cash and only for consumption.

The payment market structure consisting of cash, bank cards and third-party payment platforms currently satisfies daily consumption needs in China. Ordinary people are used to it and changing it is difficult, he noted.

China has been at the forefront of the race to develop CBDCs with efforts to promote the digital yuan through a number of red envelope campaigns, distributing e-CNY to boost its use, and expanding the geographic scope of the pilot project to new cities. and regions.

Authorities have also been trying to increase use cases for the digital version of the renminbi, with the latest examples including the introduction of digital yuan payments in public transport systems in Ningbo and Guangzhou. In September, the PBOC called for more of these usage scenarios and called for deeper integration of its new currency with electronic payment providers.

According to Xie Ping, digital yuan business had no synergistic effect or business benefit for banks, while third-party payment systems such as Alipay offered a range of more attractive functions such as investment, insurance and consumer loans.

This is why the former central bank official believes that the use of the digital yuan can be expanded by allowing individuals to buy financial products with the state-backed coin, for example, and connecting it to more traditional payment platforms to create new opportunities to spend it. for consumption.

Tags in this story CBDC, CBDC, Central Bank, China, Chinese, Circulation, Crypto, Cryptocurrencies, Cryptocurrency, Digital Currency, Digital Yuan, Former Official, Official, PBOC, trials, usage, use cases, Yuan

Do you think the use of the digital yuan will increase with an increase in use cases offered by the Chinese government? Share your thoughts on the subject in the comments section below.

Lubomir Tassev

Lubomir Tassev is a tech-savvy Eastern European journalist who loves Hitchens’ quote: Being a writer is who I am, rather than what I do. Besides crypto, blockchain and fintech, international politics and economics are two other sources of inspiration.

Image credits: Shutterstock, Pixabay, Wiki Commons

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