bitcoins in front of chinese banknotes

People’s Bank of China currency report now includes digital yuan

The People’s Bank of China (PBoC) has released a report of its financial statistics, including its central bank digital currency (CBDC) in the metrics over the last 12 months.

According to the data released on January 10, the PBoC noted that there were 13.61 billion digital yuan ($2 billion) in circulation in the country by the end of 2022. The central bank said that the CBDC experienced a growth spike of 15.3% in December amid rising adoption rates of the CBDC.

Despite the increasing metric surrounding the digital yuan, the figures make up only 0.13% of the total fiat currency in circulation. The 2022 Financial Statistics report notes that adding the digital yuan to the calculation of funds in circulation did not trigger any “notable changes” to the data.

The total amount of broad money in circulation amounted to $266.43 trillion, rising by 11.8% year-on-year. Yuan deposits rose by 10.8% to stand at 26.26 trillion yuan ($3.90 trillion), while foreign currency deposits fell by $143 billion.

Cross-border settlements involving the yuan amounted to 10.51 trillion yuan ($1.56 trillion), while national foreign exchange reserves barely surpassed the $3 billion mark, according to the report. The PBoC notes that only $1.39 trillion yuan ($207 billion) was injected into the economy in what marks an upbeat year for the banking regulator.

Including digital yuan data in the final report is a clear statement of intent by the PBoC to move forward with a full-scale launch of the CBDC. Already, trials have produced impressive results, with the digital yuan being downloaded over 200 million times while transaction volumes exceeded $14 billion in 2022.

A big push for the digital yuan

China’s digital yuan began trialing over two years ago, emerging as the most widely anticipated CBDC in the world. The central bank introduced the digital yuan to the world at the Beijing 2022 Winter Olympics, and the success of the operation led to a commitment to extending them to other international sporting events scheduled to take part in the country.

Locally, the pilot has been systematically expanded to include new cities and provinces, with the latest being the inclusion of Guangdong, Jiangsu, Sichuan, and Hebei. Other cities participating in the pilot programs have seized the initiative to incorporate the digital yuan in the transportation sectors of their cities.

While the CBDC has enjoyed attention from enthusiasts, the PBoC is still facing the challenge of the best way to launch the digital yuan to China’s over $1 billion residents. The central bank is still grappling with the persistent questions surrounding the privacy feature of the digital yuan, which some pundits have termed “a surveillance tool by the Chinese Communist Party.”

To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, read nChain’s CBDC playbook.

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