Tag: Digital Yuan

China expands digital yuan usage for cross-border trade

by Blockchain News

China is expanding the use cases for its central bank digital currency (CBDC), the digital yuan, also known as e-CNY, to promote cross-border trade in its Belt and Road initiative. The digital yuan was one of the first CBDCs to be developed and widely tested, with the government having expanded its testing parameter to include multiple cities and millions of people.

Xuzhou, a trade hub in Jiangsu province, plans to promote the use of e-CNY to pay for services and storage charges for goods carried by cross-border trains, according to a plan promoting the use of the Chinese digital currency in cross-border trade that was issued in the city. There are 18 regular cross-border rail connections from Xuzhou to 21 nations in Asia and Europe, making it an ideal location to pilot the use of e-CNY in cross-border payments.

The Hong Kong Monetary Authority (HKMA) is also testing the digital yuan as a cross-border payment tool in the Guangdong-Hong Kong-Macau Greater Bay Area. “The HKMA is working with mainland’s central bank, the People’s Bank of China, to test the digital yuan as a cross-border payment tool in Hong Kong,” said HKMA deputy chief executive Darryl Chan. The Chinese government hopes to improve efficiency and reduce the cost of cross-border transactions with these pilot projects.

Jiangsu province has been proactive in promoting digital yuan use cases, with Changshu, another city in the province, announcing that it will pay civil servants and people who work for public institutions using digital yuan. The Chinese government has ramped up its CBDC efforts at a time when the international trade markets are moving away from the standard U.S. dollar. Recently, China has completed multiple trade treaties with the likes of Russia and India based on their national currency over the U.S. dollar.

While the digital yuan has not yet been officially launched, the government’s efforts to test and expand its usage suggest that it is moving closer to a launch. The expansion of the digital yuan’s use cases for cross-border trade is part of a broader trend towards the digitalization of currencies, with other countries also exploring the use of CBDCs. China’s efforts in this area may give it a competitive advantage in the international trade markets, particularly as countries seek to diversify away from the U.S. dollar.

In addition to its use in cross-border trade, the digital yuan may also have implications for domestic payments in China. The Chinese government plans to use the digital yuan to reduce its dependence on the traditional banking system and to increase financial inclusion for those who are currently unbanked. The success of the digital yuan could also help China to expand its economic influence in the Asia-Pacific region and beyond, as other countries adopt its use in cross-border trade and potentially even domestic payments.

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Changshu Civil Servants to Receive Digital Yuan as Payment

by Blockchain News

Changshu, a city located in the Jiangsu Province of China, has issued a notice stating that all civil servants in its jurisdiction will be paid their full salaries in digital RMB or digital yuan from May 2023. This means that civil servants, including public service personnel, public institution personnel, and personnel of state-owned units at all levels in the city, will receive their salaries in digital yuan payment.

The notice was issued jointly by the Changshu Local Financial Supervision Bureau and the Changshu Municipal Bureau of Finance. In addition to civil servants, an on-site staff member of a local hospital confirmed that the workforce would also receive payments in digital yuan starting next month. Moreover, employees can opt for digital yuan settlements through self-service terminals.

This move is part of China’s pilot program to establish an efficient and convenient digital RMB operation and management system by 2025. The province of Jiangsu, where Changshu is located, has initiated this pilot program for digital RMB in Q1 2023.

China has been pushing for the adoption of its central bank digital currency (CBDC) or digital yuan in recent years. In fact, several Chinese city governments gave away over 180 million yuan ($26.5 million) worth of the CBDC during the Lunar New Year period in February 2023 to boost adoption.

However, the government’s push for CBDC adoption has not been well-received by residents of Hong Kong. In the first four days of the digital yuan hard wallet launch, only 625 Hong Kong residents had signed up, despite a 20% discount on purchases from 1,400 local vendors, subsidized for CBDC owners by the government.

The lack of adoption in Hong Kong is due to various factors, including concerns about the potential loss of privacy and autonomy, as well as uncertainty about the long-term stability of the digital yuan. Despite this, China is pushing ahead with its CBDC adoption plans, and Changshu’s decision to pay its civil servants in digital yuan is just one example of this ongoing effort.

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WeChat Adds Digital Yuan Payment Functionality

by Blockchain News

WeChat, China’s leading social networking and payment app, has now integrated the country’s central bank digital currency, the digital yuan, into its payment services, according to local reports. This move comes after Alipay, another leading payment platform, added the same functionality to its platform in December 2022. WeChat’s addition of the digital yuan fast payment function allows users to make payments on certain mini-programs and platforms that support the digital yuan.

The pilot version of the digital yuan application’s “Wallet Quick Payment Management” page currently lists 94 platforms, now including WeChat, that can be accessed. The integration enables WeChat Pay to allow digital yuan payments on certain apps, such as McDonald’s food orders and bill payments. However, users need to authorize the digital yuan wallet operator to sync their WeChat-bound mobile phone number to activate the fast payment function successfully.

According to Linghao Bao, an analyst at Trivium China, a strategic advisory firm, “Chinese consumers are so locked in WeChat Pay and Alipay, it’s not realistic to convince them to switch to a new mobile payment app. So it makes sense for the central bank to team up with WeChat Pay and Alipay as opposed to doing it on its own.”

The digital yuan, also known as the e-CNY, is being piloted in at least 26 Chinese provinces and cities. The token saw an increase in transaction volumes on Chinese e-commerce platforms during the 2023 Lunar New Year shopping season, helped by e-CNY handouts from authorities.

Alipay had announced its access to the digital yuan acceptance network in December 2022, enabling users to spend digital yuan consumption on platforms served by Alipay, including Taobao, Shanghai Bus, Ele.me, Youbao, Tmall Supermarket, and Hema.

As the digital yuan’s integration with leading payment platforms like WeChat and Alipay grows, it is expected to become more widely adopted in China, potentially challenging existing payment methods like cash and cards. The central bank’s collaboration with these platforms is likely to help broaden the appeal of the digital yuan among Chinese consumers who are already comfortable with these apps.

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PBOC Governor Says Digital Yuan Will Prioritize Privacy Protection

by Blockchain News

Yi Gang, the Governor of the People’s Bank of China (PBoC) has reiterated that discussions on its Central Bank Digital Currency (CBDC) dubbed the Digital Yuan (e-CNY) are more centered on the privacy aspects of its operations to users.

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Speaking at the Hong Kong Fintech Week, Yi said privacy protection is top on its list.

 

Coming off as one of the Central Banks with a vested interest in CBDCs, the PBoC said its e-CNY is mostly focused on retail domestic transactions as a major complement to cash in the digital world. It said in a bid to protect consumer privacy, that it has employed a 2-tier system.

In the first tier, Yi Gang acknowledged that the PBoC facilitates inter-institutional transfers with banks under its jurisdiction. At this stage, no customer information is collected. In tier 2, the banks distribute the e-CNY directly to consumers but obtain only the information that will enable them to stand right by the law.

Yi Gang noted that no entity will be able to probe a transaction without any rigorous legal permission, granting most users the safety they need to embrace the e-CNY.

“The PBOC ensures personal information security through advanced technology and strict management, with full adherence to consumer privacy protection laws and regulations. Transaction-related data is encrypted for storage,” Yi Gang said in the speech further assuring that “Sensitive consumer information is de-identified to non-transacting parties. Entities and individuals are prohibited from arbitrary inquiry or information usage without rigorous legal authorization.”

China comes off as the world’s most advanced economy with a functional CBDC in circulation. While the digital legal tender has not been officially launched for everyone in the country to use yet, its retail pilot tests have been robust, with a presence in top cities including Suzhou, and Shenzhen amongst others.

Yi Gang said the PBoC has an active collaboration with the Hong Kong Monetary Authority (HKMA) as regards CBDC interrelationship and he said the bank is interested in creating other such relationships with other Central Banks around the world.

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China’s Digital Yuan Has Topped Over $14 Billion in Transaction Volume

by Blockchain News

The Chinese Central Bank Digital Currency (CBDC) also known as the e-CNY has hit close to $14 billion (100.04 billion Yuan) from 360 million transactions as it gains widespread acceptance in the country. 

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The People’s Bank of China reported the news and that about 15 provinces have been selected as of August 31 to carry out the work of distributing the digital Renminbi (RMB) across10 institutions in various sectors such as healthcare, education, culture, and tourism. 

The report also revealed that the e-CNY, which meets the public’s demand for mobile payments and provides safe and innovative payments for visitors from outside of China, was included at the 2022 Winter Olympics and Winter Paralympics in Beijing.

A number of e-government platforms have established the Digital Renminbi Payment Services, which encompass both online and offline channels to handle a variety of public utility payments. The e-CNY can also be used to provide tax refund money, special funds for monthly medical insurance payments, funds for helping persons in need, and “specific, special, and novel” Enterprise assistance funds.

The advantages of the e-CNY as a form of legal tender include trust, interoperability, and late development which is helpful in increasing transaction transparency and intelligent level of fund management while lowering settlement and compliance costs.

China is Accelerating The Digital Economy.

Even though the e-CNY doesn’t appear to have increased exponentially since the People’s Bank of China reported it had transacted over $12 billion (87.565 billion Yuan) in January, there is still hope that the number of transactions will rise before the end of the year as the digital renminbi pilot project is put into action.

The Bank of China recently introduced an educational electronic RMB smart contract prepaid fund management product, expanding the pilot’s focus to school education, in partnership with the Education Bureau and the financial authorities of Chengdu’s Longquanyi District.

China has kept up its impressive efforts in perfecting the e-CNY. The digital yuan app now enables users to use the e-CNY to pay for public transportation on 10 bus lines.

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China Central Bank Releases Digital CNY Smart Contract Prepaid Fund Management Product

by Blockchain News

According to the China Financial Association, the Digital Currency Research Institute of the People’s Bank of China has launched a digital renminbi smart contract prepaid fund management product – “Yuanguanjia”.

The product was launched to the public across the country at the 2022 Second China (Beijing) Digital Finance Forum held on September 8.

It aims to provide users with prepaid consumption service scenarios by deploying smart contracts on digital RMB wallets. A solution to prevent merchants from misappropriating funds and protect users’ rights and interests.

This product solves the problem that users avoid merchants running away with prepaid consumption and protects consumers’ rights and interests.

The company that released the digital renminbi smart contract prepaid fund management product-Beijing, Central Business District Xinlian Technology Co., Ltd., said that: “this model transforms prepaid consumption into instant consumption, further clarifies that the ownership of prepaid funds belongs to consumers, and ensures that prepaid funds are not was misappropriated.”

Data shows that the digital yuan (e-CNY), the digital currency of the People’s Bank of China (CBDC), is growing rapidly. Since the public trial, transactions in the new fiat currency have totalled 87.57 billion yuan ($13.68 billion).

Last month The Bank of China, in collaboration with the Education Bureau and financial authorities of Longquanyi District, Chengdu, launched an educational electronic RMB smart contract prepaid fund management product, extending the pilot scope to school education,

As reported on August 25 by blockchain.News, the Beijing municipal government has announced a two-year (2022 – 2024) Metaverse innovation and development plan that will require all districts to follow the newly released Web3 innovation program guidelines.

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$30m e-CNY Airdropped in Shenzhen to Boost Consumer Spending

by Blockchain News

The use of China’s Central Bank Digital Currency (CBDC) is currently being boosted by the city of Shenzhen, according to reports that the authority has airdropped 30 million Digital Yuan (e-CNY) to its residents.

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According to the Shanghai Securities News, the airdrop was aimed at changing the resident’s consumer spending habits to be appropriately revitalized.

Per the report, the airdrop will be made or distributed through food delivery giant, Meituan Dianping, one of the private partners helping the Chinese government with the broad retail testing of the e-CNY. In order to receive the Digital Yuan airdrop, interested users will need to indicate interest in the program by signing up on the Meituan app, and applying for the incentive.

The final beneficiaries will be selected based on a lottery system, a trend which is common to Shenzhen and e-CNY airdrops. Successful residents will be able to spend the issued funds at more than 15,000 merchant stores that accept the e-CNY as payment for goods and services rendered.

The initiative from the Shenzhen city government is not the first of its kind as the officials continue to explore avenues to support the local economy amidst the growing incidence of lockdowns stirred by the Covid-19 pandemic.

The airdrop is also evidence that the CBDC from the People’s Bank of China (PBoC) is a very functional one and very close to a broad national launch. Despite the official launch date of the e-CNY not yet announced, a lot of accolades have been shared as the PBoC pushed for the new legal tender to feature at this year’s Olympic Games held in January. The CBDC also reportedly had transaction figures that surpassed records from international payment giants like Visa.

The report from Shanghai Securities News confirmed that previous airdrops like these are known to bolster consumer spending indeed, and expectations mount that this latest measure will also follow suit.

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The Russia-Ukraine War Might Accelerate CBDC Issuance, Former BOJ Official Says

by Blockchain News

The sanctions slapped on Russia based on its invasion of Ukraine might prompt more nations to adopt central bank digital currencies (CBDCs) as a shield against the U.S. dollar’s supremacy in the global financial system, according to the former Bank of Japan (BOJ) executive Hiromi Yamaoka.

China has already set the ball rolling with its digital yuan. Yamaoka noted: 

“While sanctions using financial infrastructure are necessary in extreme cases like the Ukraine crisis, they are ‘emergency means’ that should not be overused.”

With U.S. allies like Japan joining the sanctions, Yamaoka believes a situation that pushed Russia into default was intentionally developed. 

He pointed out:

“The most effective, powerful weapon was the freezing of Russia’s foreign reserves.”

Following concerns from the Group of Seven (G7) nations, Japan recently requested crypto exchanges to cancel transactions of crypto assets that were subject to asset-freeze sanctions against Russia and Belarus.

Yamaoka stated that national security and defence would become key issues when discussing CBDCs. He added:

“There’s a chance a country like China could promote usage of digital yuan for cross-border transactions and create a currency bloc to counter the dollar’s dominance.”

During his BOJ tenure, Yamaoka was the head of the payment and settlement systems department. Therefore, he is well versed in CBDC and global settlement affairs.

Likewise, speaking on CNBC’s Squawk Box Asia Monday, financial technology consultant and author Richard Turrin shared similar sentiments that China’s digital yuan could counter the dollar’s dominance in international trade settlements this decade. 

He stated:

“Remember, China is the largest trading country, and you’re going to see digital yuan slowly supplant the dollar when buying things from China.”

Turrin added that there was a high likelihood nations would seek other payment channels to stop the current dollar dependence as part of the “risk management exercise.”

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Digital Yuan Transactions Overtakes Visa during Beijing Winter Olympics

by Blockchain News

At the opening ceremony of the 2022 Winter Olympics in Beijing, the number of transactions using the digital yuan greatly exceeded Visa, according to a Wall Street Journal reported on Wednesday.

At the time of the Beijing Winter Olympics, the Olympic Village, athletes and tourists can use cash, Visa cards or digital yuan for transactions.

Many businesses that support digital renminbi are outside the isolation circle, and there are also many self-service machines on-site at the Winter Olympics that allow people to exchange fiat currency for digital renminbi, thereby reducing human-to-human contact and effectively controlling the spread of COVID-19.

Beijing 2022 Olympic Organizing Committee says that:

“Replacing cash with digital yuan for payment can effectively reduce direct contact between people and the risk of the spread of Covid-19.”

Although in China, dominant mobile payment platforms, Alipay and WeChat Pay, have become widely accepted payment methods by the public.

Relevant personnel indicated that the digital yuan or DCEP may be catastrophic for dominant mobile payment platforms, the “stickiness” of those platforms and their wide-ranging lifestyle offerings as the reason they might endure despite the advantages of a government-backed digital currency.

But due to the exclusive agreement with visas at the Winter Olympics, the Olympic Village, athletes and tourists can only use cash, Visa cards or digital yuan for transactions.

The usage of the digital yuan raised scepticism to the U.S., Senator Pat Toomey, a senior member of the U.S. Senate Banking Committee, requested the U.S. administration to closely examine the Chinese digital yuan’s rollout during Beijing Winter Olympics.

As reported by blockchain.News on January 19, China’s CBDC is growing at a fast pace as data released official from the PBOC financial markets department revealed the new legal tender has inked a total of 87.57 billion yuan ($13.68 billion) in transactions since public trials began.

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Digital yuan transactions beat out Visa at Winter Olympics venue: report

by Cointelegraph

On the day of the opening ceremony of the Beijing 2022 Winter Olympics, there were reportedly more transactions made in China’s central bank digital currency than those through Visa.

In a Wednesday report from the Wall Street Journal, a person familiar with the matter said transactions in digital yuan significantly outnumbered those of Visa on Feb. 4 at the Beijing National Stadium, also known as the Bird’s Nest — the location of the opening ceremony of the 34th Olympic Winter Games. However, many of the retailers allowing purchases with China’s central bank digital currency, the digital yuan — or e-CNY — were outside the Olympics’ quarantine “bubble” for athletes, journalists, and staff.

According to the report, those within the bubble have the option of paying for goods or services with cash, Visa, and digital yuan, and there are many automated machines allowing people to exchange fiat currency for e-CNY. Coupled with the likely intention of reducing contact between individuals in an effort to prevent the spread of COVID-19, it seems the country’s digital currency is pulling ahead of Visa — at least in an environment with limited use cases that includes participation from Chinese consumers.

“Replacing cash with digital yuan for payment can effectively reduce direct contact between people and the risk of the spread of Covid-19,” reportedly said the Beijing Organizing Committee for the 2022 Games.

Though payments using mobile apps like Alipay, WeChat Pay, and others are generally accepted at many retailers in China, these methods aren’t allowed at the Winter Games due to an exclusivity contract with Visa. The credit card company has reportedly not pushed back against the digital yuan payment options, possibly because it is awaiting approval of a domestic license application to operate in China.

CNN reported on Jan. 31 that the first international test run of China’s CBDC is facing hurdles due to the pandemic, with officials limiting the number of people allowed to enter the country. Though China hasn’t released data on the number of digital yuan transactions or athletes using the CBDC, U.S. lawmakers have warned Americans participating in the games of the potential dangers of testing the digital currency, including threatening U.S. interests in cross-border payments.

Related: China’s central bank releases pilot version of digital yuan wallet

At the time of publication, Cointelegraph was unable to find any reports of athletes claiming to have used the digital yuan for food or other essentials. The Wall Street Journal reported both the president of the Dutch Olympic Committee and a former Beijing resident now involved in television coverage of the games implied there was little point in using the digital currency when Visa was available. The Winter Olympics are scheduled to conclude on Feb. 20.