The People’s Bank of China (PBC) has included in its currency circulation report the country’s central bank digital currency (CBDC), the e-CNY, also known as digital yuan.
As per the central bank’s 2022 financial statics report which was released earlier in January 2023, as of December 2022, there were 13.61 billion e-CNY in circulation, worth a roughly USD 2 billion at the time of publication.
In December, the currency in circulation registered an increase at a rate of 15.3%, with the broad money supply having been reported to be 266.43 trillion CNY.
Following the addition of the e-CNY to its figures, the PBC advised that no ‘notable changes’ were caused to growth rates. Furthermore, the 13.61 billion e-CNY made up a rough approximate of 0.13% of the 10.47 trillion CNY reported to have been in circulation at the end of 2022.
The e-CNY – use cases and plans
Issued by the PBC, the e-CNY is also known as the Digital Currency Electronic Payment (DCEP), or the digital RMB, and is part of China’s ongoing attempt at having its currency digitised, with the digitalisation including currently circulating banknotes and coins. As such, the e-CNY constitutes part of the country’s monetary base and makes up part of the cash in circulation, being mainly intended towards the use of high-frequency small-scale retail transactions.
In June 2022, FDI China reported that the CBDC was to be distributed via a two-tier system, with the PBC planning to disburse e-CNY to a list of approved commercial banks, including: the Agricultural Bank of China, Bank of China, China Construction Bank, Bank of Communications, Postal Savings Bank of China, and China Merchants Bank.
Furthermore, users were enabled to leverage the two digital banking systems WeBank (WeChatPay) and MyBank (AliPay), or they could download the e-CNY app to manage their e-CNY transactions.
At the time, China had 23 cities trialling the digital currency, including its capital, Beijing, and other major areas of the likes of Shenzhen, Chengdu, and Suzhou.
CBDC developments in China
Being the world’s second-largest economy, China was among the first to start trialling CBDC in select cities and regions.
In December 2020, Suzhou released 20 million e-CNY (USD 30 million) via lottery, enabling winners to receive ‘red packets’ via an app containing up to 200 e-CNY to be spent on JD.com.
Ahead of the 2021 Lunar New Year, Beijing carried out a similar trial with the vouchers to be used throughout the holiday. The trail was available to those with a Chinese ID number or residence permits from Hong Kong, Macao, or Taiwan, and each individual received 200 e-CNY (USD 30). The money could be spent at appointed offline locations or for select purchases on JD.com.
During the 2022 Winter Olympics in Beijing, the e-CNY was one of the three payment methods accepted, in addition to cash yuan and Visa credit cards. Despite this, Cointelegraph reported that a former PBC research director had stated that the usage of the digital currency has been low, with transactions having totalled an estimated USD 14 billion as of October 2022, at more than two years distance following the e-CNY introduction in April 2020.