China was the first major economy to pilot a sovereign digital currency, also known as a CBDC (central bank digital currency).
In fact, it is the only country that has continuously made strides with its new electronic payment system while the rest of the world is still in the research phase. That said, after having run numerous trials over the last two years for its digital yuan, the People’s Bank of China is now aiming for a wider reach by launching an e-CNY wallet app in the country.
To recall, over the past two years, cities throughout China have even been holding lotteries, distributing a total of 10 million digital yuan (worth about US$1.47 million at the time) to people in Shenzhen in October 2020, 20 million digital yuan (or US$3 million) in Suzhou in December 2020, and 40.2 million digital yuan (or US$6.2 million) in Chengdu in February 2021.
For context, e-CNY is essentially physical cash converted into a digital form, and it’s been in the works since 2014.
Distribution of the digital currency takes place using a two-tier system that transfers e-CNY from the PBOC to commercial banks. Banks will then distribute the currency directly to consumers.
In November last year, PBOC’s Governor Yi Gang had said that China would continue to advance the development of its central bank digital currency and improve its design and usage, including increasing its interoperability with existing payment tools.
As of November 2021, the central banks said around 140 million Chinese citizens have opened digital yuan wallets.
As per the Reuters report, a notice in the app said it is in a research and development pilot phase and is only available to selected users through supported institutions that provide e-CNY services, including major domestic banks.
That said, the new e-CNY app is accessible on both China’s Android and Apple app stores since Tuesday, but only to people in 10 specific cities, including Beijing, Shenzhen, Chengdu, and Shanghai.