Testing of the Digital Yuan conducted by the ex-head of research at the People\’s Bank of China has yielded meager results, the report says. According to the former central banker, the digital currency has not brought any advantages to banks, and should be used for more than just replacing cash.
Folks are still using regular currency and cards, but the ex-PBOC executive prefers the digital version.
The use of China’s Central Bank Digital Currency (CBDC) has been “low and dormant,” according to Xie Ping, the former director general for research at the People\’s Bank of China. This is according to a conference on digital finance.
“The cumulative circulation of the digital yuan in the two years of testing has been only 100 billion yuan” (14 billion USD), he stated, as reported by financial news outlet Caixin Reuters. Ping believes that it is important to expand the use of the digital Yuan.
“The results are not ideal,” said Xie during the forum hosted by Tsinghua University. He stressed that “what needs to change is that the digital yuan acts only as a substitute for cash and only for consumption.”
The existing payment system that includes cash, credit cards, and third-party payments meets the needs of everyday consumption. “Ordinary people are used to it and changing it is difficult,” he observed.
China has been at the forefront of the race for CBDCs. The digital yuan has been promoted through red envelope campaigns, by providing eCNY and expanding across more cities. These are the regions.
Authorities have also tried to increase the number of people using the digital version of the renminbi. The digital yuan has been made available for public transport payments in Ningbo and Guangzhou. In September, the PBOC recommended adding more use cases and integrating the digital currency with electronic payment providers.
According to Xie Ping, the digital yuan did not provide any commercial or synergistic benefits to the banking business. On the other hand, services like Alipay offered a range of functions, including investment, insurance, and consumer lending.
This is why the ex-central bank executive believes the digital yuan’s use can be expanded. It could be used to purchase financial products or be connected to traditional payment channels to create new opportunities. It can be spent for consumption.
The rise in use cases for the digital Yuan is expected to drive up the demand for the digital currency. What do you think the Chinese government should do? Please share your thoughts in the comments below.
