From being labeled impractical to nearing mainstream deployment, the digital yuan can transform the global economic landscape.
With each passing day, the list of nations actively exploring the idea of central bank digital currencies (CBDCs) is continuing to grow at a rapid pace. While China’s digital yuan project may be the one that everyone talks about the most, in recent months, countries like The United Kingdom, Sweden and Japan have forged ahead with their own CBDC research and/or testing.
That said, the digital yuan project is head-and-shoulders ahead of any of its contemporaries at this point, owing to the simple fact that Chinese authorities have already completed many beta-testing rounds of the currency across a number of major regions including Beijing, Chengdu, and Hong Kong’s greater bay area.
In fact, just to highlight how far along the project has actually come, reports indicate that the citizens of Suzhou city can now pay for their daily travel on the city’s fifth line using the digital yuan.
A brief overview of the e-CNY project
Initially thought of as a tool that would help China digitize its economy amid the then-worsening COVID-19 situation, initial news reports simply claimed that a select group of state-run commercial banks within China were performing internal tests of a digital currency wallet that had been designed to house an called the “digital yuan” — known as the Digital Currency Electronic Payment, or DCEP.
Soon after, however, it became clear that the scope of this project would extend way beyond simple bank transfers, especially as confirmations of successful pilot trials across major metropolises like Beijing, Xiong’an New Area, Shenzhen, Suzhou and Chengdu started to surface.
In terms of how testing was carried out, most recently, authorities doled out the digital yuan — estimated to be worth around $6.2 million — to people living within the municipal limits of Beijing city via a lottery system. Basically, residents of the Chinese capital were given the opportunity to register and win one of 200,000 packets containing 200 digital yuan ($31.34) each.
The digital cash was delivered using an app that, according to various reports, has been designed to facilitate real-time monetary transactions, albeit at certain select retail outlets for the time being. Similar CBDC lotteries have also been held across many of the aforementioned destinations, clearly showcasing China’s resolve to release its digital token for mainstream utilization.
Lastly, Yao Qian, the former chief of China’s CBDC efforts, recently went on record to say that as we move into an increasingly digitized future, a vast majority of all CBDCs will eventually transition (or at least start) to support public blockchain networks like Ethereum, thus hinting at the possibility of the e-CNY eventually becoming compatible with Ether (ETH).