PBOC expands digital yuan pilot scheme to include 11 cities

TL;DR Breakdown

• The Peoples Bank of China (PBOC) expands the digital yuan trial to 11 more cities, totaling 23 cities.
• China toughens crypto laws while the nation embraces blockchain technology.

The People’s Bank of China, China’s central bank, will expand its digital yuan pilot program to 11 additional cities, bringing the total number of test locations to 23. Hangzhou, which will host the Asian Games in September 2022, is one of these 11 cities. PBOC launched its digital currency trial on Tuesday, Jan. 4, 2022.

PBOC’s digital yuan success

The shift is in response to the digital yuan’s successful market performance in pilot areas and Olympic sites during the Winter Olympics. PBOC says that the CBDC has been effective, with user and transaction sizes steadily increasing.

In recent years, trials took place in Shenzhen, Suzhou, Xiong’an, Chengdu, Shanghai, Hainan, Changsha, Xi’an, Qingdao, and Dalian, and the 2022 Winter Olympic Games closed loop.

The following eleven cities got selected for the pilot program: Tianjin, Chongqing, Guangzhou, Fuzhou, Xiamen, Ningbo, Wenzhou, Huzhou, Shaoxing, Jinhua, and Zhejiang Province. Residents in these areas were reportedly able to use digital yuan wallets beginning April 1, 2022.

As per PBOC, after the Olympics’ conclusion, Beijing and Zhangjiakou, the Winter Olympic and Paralympic Games’ co-host cities will continue to utilize the digital yuan. The PBOC’s ultimate objective is to improve market competitiveness by launching its digital currency, enhancing the efficiency and safety of the payments system, speeding up transactions, and lowering costs.

The current rate of transactions per second (tps) is 10,000, with a target of 300,000 tps in the future. The digital yuan has reportedly recorded over $13.75 billion in transactions. However, according to the survey, many wallets were created, but not as many were utilized.

The Chinese government is developing a central bank digital currency, or CBDC (digital yuan), which began testing in Shenzhen in October 2020. By the end of 2021, it had processed over US$11 billion worth of transactions. According to recent reports, residents in 23 cities can now use the digital yuan.

Meanwhile, the PBOC just concluded the debut of its digital yuan at the Winter Olympics. The digital currency will be demonstrated at two upcoming sporting events, including the Chengdu Summer Universiade and Hangzhou Asian Games.

The People’s Bank of China is working towards creating a digital yuan, also known as the central bank Digital Renminbi, to address the growth of digital platforms and digitization.

China focuses on blockchain technology and not crypto

China’s digital yuan initiatives have been quite successful, prompting many other countries to try to replicate them. It is among the first nations to launch a CBDC on such a large scale, and according to all reports, China’s tech-savvy inhabitants appear to be pleased with the endeavor.

China has also banned the purchase of cryptocurrencies and their holding and trading. The country’s Supreme Court has labeled cryptocurrency transactions “illegal fundraising.” Those who deal in crypto transactions may face imprisonment for up to 10 years or $79,000 in fines.

According to reports by Cryptopolitan, after prohibiting cryptocurrency trading and mining, China went on to declare crypto fundraising activities unlawful within the nation. All offenders are likely to be sentenced to jail time for these financial felonies.

Meanwhile, the 2022 China Metaverse has debuted, focusing on developing metaverses and other cutting-edge technologies. According to its blockchain strategy for the next ten years, China is interested in leveraging technology from the supply chain to administrative use cases.

Meanwhile, other nations are just getting started with their own CBDCs. The United States has revealed that it will begin analyzing a digital dollar. India, one of the world’s fastest-growing major economies, has announced a review of its digital rupee.

There have also been other nations and financial institutions working on digital money, including the Bank for International Settlements (BIS) and four central banks, who’ve been developing blockchain-based platforms for an international CBDC technical standard.

Both retail and interbank payments could be easier and more streamlined. In addition, cross-border payments may see potential advantages as nationally issued CBDCs, such as the digital yuan, become more widespread.