- In the 10.47 trillion yuan circulation, over 13.61 billion were from the country’s CBDC: the e-CNY
- The People’s Bank of China said that the e-CNY has not caused “notable changes” in the economy
- Transactions summed a total of almost $2 billion worth of e-CNY since December 2022
The People’s Republic of China began implementing a central bank digital currency (CBDC) in April 2020. After the ban on decentralized cryptocurrency, the government has swiftly applied e-CNY, the Country’s official CBDC, into daily transactions such as transportation and purchasable goods.
Today, the People’s Bank of China (PBoC) has included e-CNY in its currency circulation report besides its fiat currency, the Chinese yuan (or renminbi, RMB).
In an official statement, PBoC had a circulation of 10.47 trillion yuan, and 13.61 billion money was from e-CNY. It makes up around 0.13% of the circulation at the end of 2022. Even with the CBDC counted in its data, the central bank said it did not cause any “notable change” to the Country’s growth rates.
At the bottom of the page, it wrote,
“Starting from December 2022, ‘currency in circulation (M0)’ includes digital RMB in circulation. The balance of digital RMB in circulation at the end of December was 13.61 billion yuan. After the revision, there is no significant change in the growth rate of M1 and M2 at the end of each month in 2022.”
How e-CNY Works in the Country
China was one of the first countries to test the use of CBDC in specific cities, such as Ningbo and Guangdong. The Chinese CBDC was announced in April 2020 but began implementation to the public two years later. It was mainly used for public transportation and digital goods, where the buyer only needs to scan the QR code of the provider or seller to complete the transaction.
It came with positive results as the process brought a faster and more streamlined experience for both the payer and the service. However, the government and the bank still need a strategic plan for rolling out the CBDC to the rest of the Country. The use of e-CNY is currently in a testing phase in provinces before it begins full adoption in larger cities such as Beijing and Shanghai.
The creation of e-CNY correlates with the Chinese government’s strong resistance against cryptocurrency, especially Bitcoin (BTC). While China saw companies growing crypto exchanges and mining pools, the dream halted in 2020 when authorities saw BTC as an illegitimate currency. Now, only companies with blockchain-based projects remain, while any firm mainly involved with BTC either closed down or moved to another country.
In 2021, the government ordered a complete halt to BTC mining, arresting anyone who dared continue the operation. At the same time, this was the moment when the regulators started testing CBDC to the masses.
Soon, regulated digital currency can be used in every legal business, from services to products.