e-CNY Test Pilots to Continue, Public Rollout to go Beyond Olympic Games
The trial phase of the digital yuan (e-CNY) will still continue and the country-wide rollout will take more time, the Director-General of the Digital Currency Institute (DCI) at the People’s Bank of China, Mu Changchun, has said.
This is despite now having over 123 million active users as of October 2021, he said as a keynote speaker at the Atlantic Council-UC San Diego conference on digital currency in China and the Asia Pacific held this week. He adds that the central bank digital currency (CBDC) is a very complex undertaking and a complicated system for China to develop as a very large economy.
“So, we will still advance the e-CNY pilot with no preset timetable for the final launch,” Changchun said. “We are watching criteria like the user experience, the security or the robustness of the system, and also the efficiency of the business model. Although we have a large number of population to join this trial, but (still have a) small percentage of users compared to traditional electronic payment instruments (Alipay and Wechat Pay) especially for the daily active users.”
The digital currency has gone through various test pilots across major Chinese cities in the past two years. Major commercial banks and retailers including JD.com collaborated in the effort to broaden the use of the digital version of their national currency at different stages.
The DCI official’s comment somewhat puts an end to the rumour that the e-CNY would be launched for public use at the Beijing Winter Olympic which started on Friday, Feb. 4. The global event had been touted to be the launchpad for the much-awaited first digital currency by a major economy especially among foreigners going by the preparations that were made at the various venues.
“We’ll still further test the functions such as the programmability and the robustness of the dual offline function also,” Changchun adds. “Maybe we can provide more functions in the future. After that, if we are confident in terms of the network security, the robustness of the system, the scalability, and the capacity of the system, we can (in the future) formally launch the e-CNY for the whole country.”
The e-CNY usage by foreigners, like American athletes at the event, worried US Senator Pat Toomey who called for a close examination of the CBDC’s distribution, its adoption by Chinese and non-Chinese persons, and the extent of Beijing’s access to user and transaction data amongst others.
Answering some related questions in his conference presentation, Changchun said he doesn’t have the exact number of how much of e-CNY was cleared during the ongoing event except for a rough idea of a couple million in payment. But he hopes they can provide it after the Olympics. He also notes that it seems that most of the foreigners used hardware wallets while domestic users including athletes from Chinese teams, coaches, volunteers and working staff within the venues used mainly software wallets.
Another concern he touched on is about the cross-border use cases for the e-CNY. He said that while the e-CNY is mainly positioned as M-zero (M0) – meant to focus on the domestic retail sector of the payment service market, they have been “working to explore the possibility of cross border use of the e-CNY” with the effort of the international community.
“In that case, we know all the concerns from all jurisdictions such as currency substitution, weakened capital control, and privacy issues,” he said, pointing out the three principles they introduced to avoid any potential negative impact to harm the current financial or the international monetary system. There is the ‘no disruption’ principle which he says is similar to the rule of do no harm, then compliance and interoperability.