According to a statement from the People’s Bank of China (PBoC), since the pilot program’s start in 2020, transaction volumes for the central bank digital currency (CBDC) have surpassed $14 billion. Through its official WeChat channel, the central bank made the announcement and shared other expansion plans.
6 Million Merchants Accept the CBDC
The central bank announced that about 6 million merchant establishments accept payments using the digital yuan and that state institutions are relying on the CBDC to enhance their operations. According to the central bank announcement;
Several e-government service platforms in China have launched digital renminbi payment services, supporting online and offline channels to handle a variety of public utility payments, issuing tax rebate funds for monthly medical insurance payments, funds to aid those in need, and specialized, special, and new enterprise support funds using digital renminbi.
The use of the digital yuan in the transportation sector in the cities of Xiamen and Guangzhou is an excellent illustration of how widely used it is becoming. Moreover, the PBoC has been gradually increasing the number of provinces taking part in the experiments.
The amount was roughly $13 billion in January, and in just seven months, the digital yuan was able to raise another billion. The expansion of transaction volumes for the digital yuan may have been influenced by the CBDC’s use at international athletic events like the Winter Olympics and the Asian Games in 2022. Greater acceptance of the digital yuan may result from a collaboration on CBDC-based cross-border payments with Hong Kong, the city next door.
Opposition to the Digital Yuan
While it would seem that the PBoC is having an easy time developing the CBDC, there have been some difficulties along the way. Privacy concerns have perhaps been the biggest roadblock, with some accusing the idea of being one large spying operation on the public.
A measure to forbid the hosting of the digital Yuan by mobile applications has been proposed by several US Congressmen. According to the congressmen, “the Chinese Communist Party will use its digital currency to control and spy on anyone who uses it.”
China has vehemently denied the claim, asserting that it will protect user information and work to prevent its misuse. The PBoC’s head, Mu Changchun, stated that while an anonymous CBDC is not practical at the moment, “the protection of user privacy by digital renminbi is the highest among the current payment tools.”
The digital Yuan has other challenges as well. Along with competing for market share with services like WeChat Pay and AliPay, the digital yuan is also confronted with the threat of shadow banking and subsidization, which hangs over the CBDC like an ominous cloud.