China’s Central Bank Official Stresses on Use of Digital Yuan in Retail Sectors

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Jai Pratap

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Jai Pratap

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Jai serves as the Asia Desk Editor for Cryptonews.com, where he leads a diverse team of international reporters. Jai has over five years of experience covering the web3 industry.

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September 4, 2023 03:10 EDT

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The head of the Digital Currency Research Institute at the People’s Bank of China (PBOC), Changchun Mu, has emphasized the necessity of making the digital yuan available for all retail payment scenarios. 

Mu made this statement during a trade forum held in Beijing, where he also underscored the importance of compliance and the acquisition of relevant financial licenses by wallet providers and payment app operators, Chinese publication The Paper reported. 

Mu stated, “The first step in the upgrade process is to use digital yuan as the payment tool for all retail scenarios.” 

The central bank’s official proposed a short-term strategy, suggesting the unification of QR code standards on a technical level to enable barcode interoperability. 

As reported earlier, China is also planning to push digital yuan adoption in the upcoming Asian Games. 

PBOC Official Outlines Plans for Wider Digital Yuan Use 

The PBoC official outlined a long-term plan to steadily implement the upgrade of digital yuan payment tools.

This announcement follows the PBOC’s commitment last year to promote universal QR payment codes, a move aimed at enabling consumers to make payments by scanning a unified barcode. 

Currently, QR code payment systems are already widely used in China, with dominant players like WeChat Pay and Alipay leading the way.

Regarding the progress of the digital yuan, the PBOC initiated trials and introduced a pilot app in January 2022. 

These trials have expanded to at least 26 locations across 17 provincial-level cities and regions, including major cities such as Beijing, Shanghai, Shenzhen, and Suzhou, according to state media Xinhua’s report in April.

However, despite these efforts, the adoption of the e-CNY, as it is currently being tested in pilot regions throughout China, remains limited. 

Mu Suggests Integration Between Digital Yuan and Existing Payment Tools

Mu acknowledged that the existing interbank payment and settlement systems continue to function efficiently, alleviating the need for an immediate replacement with the CBDC system. 

Instead, he suggested achieving seamless integration between the e-CNY and existing electronic payment tools and commercial bank deposits.

From a wholesale perspective, Mu highlighted the potential of the digital yuan for settlement within the financial market infrastructure. 

He also pointed out the possibility of leveraging smart contracts to facilitate delivery versus payment and payment versus payment transactions, ultimately enhancing wholesale payment efficiency.

As the People’s Bank of China continues its efforts to promote the adoption of the digital yuan, it remains to be seen how these strategies will impact the broader retail and wholesale payment landscape in China.