China is leading the global development of Central Bank Digital Currency (CBDC), with records of successful trials. But the world’s second-largest economy said it is not ready to roll out the digital currency, called eCNY, yet.
The People’s Bank of China governor Yi Gang said on Tuesday that China will continue to advance the development of its central bank digital currency and improve its design and usage.
“Going forward, we will continue to prudently advance R&D of eCNY, improve its design and use,” Yi said via video at a Bank of Finland event.
Tekedia Mini-MBA edition 16 (Feb 10 – May 3, 2025) opens registrations; register today for early bird discounts.
Tekedia AI in Business Masterclass opens registrations here.
Join Tekedia Capital Syndicate and invest in Africa’s finest startups here.
China has successfully tested eCNY in major cities including Shenzhen, Beijing and Shanghai and is poised to carry out more tests before launching the digital version of its fiat. In august, the eCNY was used to facilitate payments in the country’s futures market.
The application of e-CNY in the futures market provided an efficient, zero-cost and safe payment alternative for futures exchanges and market participants through real-time inter-bank payment, according to China Securities Journal.
Mu Changchun, head of the PBOC’s Digital Currency Institute, said at the Hong Kong Fintech Week conference last week, that About 140 million people had opened “wallets” for the digital yuan as of October and used it for transactions totaling around 62 billion yuan ($9.7 billion).
Despite the success the eCNY has recorded so far, China has not set a timetable for its roll out, but said it will continue to work on many components of the digital currency.
“China will improve eCNY’s privacy protection and anti-counterfeiting feature and increase its interoperability with existing payments tools,” Yi said, adding that China will also test eCNY’s impact on its monetary policy and financial markets.
Recently, the Chinese authorities have embarked on reforms to address concerns about the use of private information. That is one more area of eCNY that China wants to work on.
Yi said the PBOC attaches great importance to the issue of personal information protection, as CBDC issuers have to balance the need between safeguarding privacy and preventing crimes.
To strike the right balance, the PBOC collects information on a “minimum and necessary” basis in eCNY applications, and strictly controls the storage and usage of personal information.
China has been working on its digital currency for years, but recently sped up pace following the growing popularity of cryptocurrency. China rapidly became a huge cryptocurrency market, controlling the largest share of global bitcoin mining. In September, China declared all cryptocurrency transactions, including mining, illegal.
The move is part of China’s financial industry reforms that have targeted payment companies such as the Ant Group. It also is seen as a way of clearing obstacles that may stall the acceptance of eCNY. While the digital yuan has scored a significant measure of success in domestic trials, it still falls short in cross-border transactions. In February, Beinjing moved to team up with Hong Kong, Thailand, the United Arab Emirates (UAE), along with the Bank of International Settlements (BIS), to explore cross-border payment for digital currencies.
Yi said eCNY aims to meet the need of domestic retail payments as cross-border digital payments involve more complicated issues, such as anti-money laundering.
“The PBOC is willing to strengthen cooperation with world central banks in developing CBDC, including setting standards and rules,” Yi said.
Given the many holes yet to be filled in the eCNY development, China is not in a hurry to launch its CBDC, as it prioritizes efficiency over speed.