The People’s Bank of China (PBoC) has revealed that it intends to build on the success of its central bank digital currency (CBDC) pilot trials by expanding the program to more cities and improving its technological capabilities in the near future.
As reported by state-owned Xinhua News Agency, Lan Zhou, the PBoC’s head of monetary policy, disclosed this while speaking at a press conference of the State Council Information Office.
Zhou highlighted the current scope of the pilot project. Following the announcement of the project’s expansion back in April. Twenty-one cities spread across 15 provinces were trialing e-CNY payments. He said this is an increase from the initial 11 that were part of the trial in 2021.
However, he expects that more cities from the remaining ten of the total 31 Chinese provinces will soon get on board the project. This is owing to evidence that the CBDC has helped participating locations improve the quality of life of their residents.
“The e-CNY has demonstrated to be an invaluable tool in improving quality of life, stimulating consumption, growing internal demand, and ensuring steady economic development through its functions such as smart contract utility,” he said.
To emphasize, the PBoC official noted that the CBDC had an impressive level of adoption across the test sites. As of May, Chinese consumers had done a cumulative 264 million transactions amounting to a value of RMB 83 billion (about $12.27 billion) in 2022. More than 4.56 million vendors now also accept the CBDC.
Meanwhile, city governments have not been left out in the adoption spree. Several municipal governments, such as Shenzhen, have used the e-CNY platform to perform airdrops for their citizens to stimulate spending and revive their economies. Several have also started accepting tax and bill payments with the platform.
China still plans international expansion of the CBDC
Aside from domestic adoption, China is exploring using the e-CNY for cross-border transactions. China has been a member of the mBridge project along with four other central banks and the Bank for International Settlements (BIS).
Despite being one of the leading adopters of a CBDC, China is not resting on its laurels. Chinese lawmakers have proposed regulations that will solidify the integration of the CBDC into the country’s financial and legal system.
The proposal will recognize the digital yuan as legal tender along with physical banknotes. It will also spell out the relationship between the CBDC and physical notes, as well as clarify the role commercial banks are to play in their handling.
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