China is ramping up efforts to roll out the digital yuan to the broader population, as the country’s technology giants like Alibaba and Tencent jump on board.
But there are challenges ahead and one particular question stands out: Will Chinese citizens — who already use two dominant mobile payment systems run by these same tech firms — begin paying with the digital yuan?
The People’s Bank of China (PBOC), the country’s central bank, has been working on the digital form of its sovereign currency since 2014.
Also known as the e-CNY, it’s designed to replace the cash and coins already in circulation. It is not a cryptocurrency like bitcoin, in part because it’s controlled and issued by the central bank. Bitcoin is a decentralized digital currency that isn’t backed by any central banks or a single administrator.
China’s digital yuan is a form of central bank digital currency (CBDC) which many other central banks around the world are also working on — though the Chinese central bank is way ahead of its global peers.
To date, the PBOC has been piloting the digital currency via lotteries, and tens of millions of digital yuan have been handed out to citizens in a handful of cities in China.
Chinese authorities are now stepping up their ambition to expand the use of e-CNY to more citizens even though a nationwide rollout date has not been set.
“It feels to me like they’re now ready to push this out wider,” Linghao Bao, analyst at consultancy Trivium China, told CNBC.
