China’s central bank digital currency (CBDC) is moving toward another milestone as it nears the $250 billion mark for total transaction volume.
People’s Bank of China (PBoC) Governor Yi Gang disclosed the metrics of the digital yuan at a finance conference in Singapore, painting a positive outlook for the CBDC. Gang noted that since the digital yuan pilot began in early 2022, around 120 million individuals have interacted with the offering in 950 million transactions.
Yi told conference attendees that the average digital yuan transaction stood at $260. However, despite the impressive figures around the digital yuan, the total amount in circulation is less than 1% of the country’s monetary supply.
Yi remarks that the PBoC will be looking to increase the amount of digital yuan in circulation in the hopes of increasing adoption rates for the CBDC. Experts point to the inclusion of the digital yuan in a financial report by the central bank at the start of the year.
The numbers around the digital yuan put China miles ahead of other countries exploring the launch of a retail CBDC. Despite the milestones achieved, the PBoC says it will continue to explore new ways to trigger an even larger growth spurt for the digital yuan.
At the conference in Singapore, Yi revealed that the PBoC is open to exploring retail settlements using the digital yuan and the Singapore dollar. The central bank views cross-border settlement functionality as a tool to improve adoption rates, striking several bilateral agreements along the way.
The PBoC eyes Russia and Hong Kong as the likeliest jurisdictions to test out the cross-border functionalities of the digital yuan. The central bank also took part in a joint study on cross-border CBDCs involving Singapore, Hong Kong, and the United Arab Emirates put together by the Bank for International Settlements (BIS).
Aside from cross-border transactions, the central bank has been adding a ton of functionalities to the CBDC to drive up its attractiveness among users. The integration of smart contract functionality has seen the digital yuan deployed in various use cases, including the trade of securities.
Eyeing bigger gains with cities taking the lead
Chinese city administrators are picking up the pace in driving the adoption of the digital yuan. Several Chinese cities have offered incentives in the transportation sector for citizens making payments with the CBDC, while others have given the green light for their use in paying for taxes and other utilities.
Starting in May, the Chinese city of Changshu announced that civil servants would be paid their salaries in digital yuan, making it the largest adoption leap in Mainland China.
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