According to the PBoC, 1.1 billion Yuan have already been processed through a total of 3.1 million transactions. This is equivalent to about $162 million.
The number of newly established digital wallets has increased significantly. Currently, the use of the CBDC is being investigated in over 6,700 use cases.
Europe and the USA are also researching the implementation to digitize their currencies. To this end, plans have already been announced for tests in certain areas.
China continues to make progress with the development of its digital Yuan. According to the deputy head of the People’s Bank of China (PBoC), Fan Yi Fei, 1.1 billion Yuan have now been spent on over 3.1 million transactions with the digital CBDC. This is equivalent to a total of around $162 million. The number of wallets and also the tests in various areas of use are skyrocketing.
Increasing active use of the digital Yuan
It is worth noting in this context, that China is allegedly planning to reduce its holdings of US government bonds from currently more than $ one trillion to just under $800 billion even before the introduction of the digital Yuan.
Fan Yi Fei recently announced that a total of 113,300 private digital wallets and 8,859 corporate wallets had been created by the end of August. A significant amount of money is already being transferred here. The PBoC sees the coin known as Digital Currency Electronic Payment (DCEP) as a critical financial facility for the future, as Yi Fei expressed in his speech:
„Data is King. The digital economy has become more significant during the Corona crisis. In cross border finance, big data analysis provides data support for decision making in trade financing and credit thus promoting the development of international trade.“
Yi Fei advocates, that the central banks develop an association of digital currencies with common standards. He sees a need to drive the development of digital money due to the growth in the crypto-market:
„In recent years with the development of distributed ledger technology and crypto assets, such as Bitcoin, stable coins have emerged and triggered a new wave of competition attempting to reap profit from substituting the fiat currency in circulation … To protect fiat currency from these crypto-assets and safeguard monetary sovereignty it is necessary for central banks to digitise bank notes through new technologies.”
According to Fintech Futures, the financial institution is currently investigating over 6,700 use cases for the CBDC. These include shopping, transportation, expense reimbursement and cathering solutions. In the Luohu area of Shenzhen, 5,000 medical staff people got recently paid a reward in digital Yuan for extraordinary accomplishments.
The competition of digital currencies
The advancement of cryptocurrencies such as Libra has obviously prompted China to react quickly. However, the work on the digital Yuan is also increasingly influencing the Western economic and monetary system.
In Europe and the USA, there is also an increasing focus on the CBDC issue. The USA, for example, has already gathered a number of representatives to discuss the introduction of a digital Dollar. The progress of China’s DCEP in particular is prompting Western governments to take action.
Last week, the European Central Bank (ECB) also had a detailed report published on the subject of the digital Euro. A group of specialists examined the advantages and risks of digital currencies. ECB President Christine Lagarde also announced plans to launch tests of a digital Euro on October 12.
With the introduction of the digital Yuan, China would strengthen its competitiveness in the international economy. It is therefore not surprising that the Western powers are also increasingly interested in digital currencies. Competition between countries is increasingly developing in this area.