Digital Yuan Pilot on Course Despite Claims of Low Usage

The People’s Bank of China assured the public that the digital yuan (renminbi) pilot is running steadily. The CBDC is currently expanding its pilot areas and undergoing more developments.

The People’s Bank of China (PBoC) published a notice on Jan. 4 stating that its central bank digital currency trial was “running steadily.” The statement came during The 2023 Working Conference of the People’s Bank of China.

The meeting covered several aspects of the economy in China, which is currently being gravely affected by the COVID-19 virus. One of the critical points in the meeting was the state of the digital yuan, the country’s digital currency.

The conclusion was straightforward. The PBoC emphasized that the pilot for the digital yuan was running steadily. This is unsurprising, given that the country has, in fact, been steadily increasing the scale and scope of the CBDC.

It has conducted several new trials recently, as other countries only begin to deploy their own tests. Still, there may be some more time before the trial transforms into true nationwide use.

Digital Yuan Marches On

The results of developments in China’s CBDC pilots have also been significant. Alipay recently joined the processing network for the CBDC, making it the first payment platform to do so. Last year, the central bank said that it had launched a new phase of the CBDC pilot, which would allow payments for bus travel and housing.

Meanwhile, it has expanded testing from pilot cities to a larger provincial level of use. These are Shenzhen in South China’s Guangdong Province, Suzhou in the eastern Jiangsu Province, Xiongan New Area in Hebei Province in the north, and Chengdu in Southwest China’s Sichuan Province.

Former Chinese Central Banker Has Critical Views

However, despite the seemingly positive news that appears to be coming from the media, some skepticism is bubbling. A former Chinese central banker said that the actual usage of the digital yuan has been low. Xie Ping, a former PBOC research director and current finance professor at Tsinghua University, said that the actual figure had only crossed $14 billion in two years.

Ping believes that the results could be better, and there need to be changes made to the CBDC’s use case. Specifically, it needs the ability to be used for paying for financial products while also roping in more payment platforms.