- China’s digital yuan surpasses 4,000,000 transactions.
- There are plans to expand the pilot to Suzhou, Chengdu, and South Beijing.
- The news comes as the European Central Bank and the Reserve Bank of Australia announce their own digital currency initiatives.
Digital Yuan pilot picks up pace as volumes double and 4,000,000 transaction milestone is reached.
The pilot test for China’s new central bank digital currency (CBDC), digital yuan, is turning out to be a success according to Yi Gang, governor of the People’s Bank of China (PBOC).
Since its launch earlier this year, 4,000,000 transactions with a total value of $299 million have been completed using the PBOC’s digital yuan, with transactions doubling over the past month.
According to Gang, the PBOC has already completed infrastructure for its digital yuan rollout, with testing planned in Suzhou, Chengdu, and south Beijing. These tests are likely to include bill payments, transportation, and government services.
Digital yuan is the PBOC’s effort to keep pace with the Chinese economy’s digitization, laying the foundations for a cashless economy. It also allows the central government to maintain a level of control over the digital economy, where a comprehensive legal framework does not yet exist.
With digital yuan, China has taken the lead in the CBDC space, provoking a flurry of initiatives from central banks worldwide. This week, the European Central Bank launched a public engagement initiative to gain some insight into Europeans’ opinions on a digital euro.
Meanwhile, the Reserve Bank of Australia announced plans to partner with two of the country’s biggest banks to explore the possible applications and implications of a decentralized ledger-based CBDC.
However, China’s biggest competitor, the United States (US), is taking a more cautious approach. Federal Reserve Chair Jerome Powell thinks the US has a historical obligation in leading digital innovations but warns that any steps the US takes towards a potential ‘digital dollar’ must be taken “safely.”
As China speeds up the pace of its development, an over-cautious Federal Reserve risks being left behind.