By Shelly Melancon (Switzerland)
China is close to the finish line in the race for CBDC issuance, beyond any other country. According to reports, more banks within the country have brought the e-CNY on board, an indication of considerable progress it has made on its CBDC pilot program. Before now, the e-CNY was only open to about 6 government-owned banks.
Available reports reveal that 35 new banks showed support for the e-CNY and have added it to their mobile apps. In light of this, they now have the opportunity to transfer the e-CNY to digital wallets belonging to their clients. Banks that endorsed the e-CNY include rural commercial banks, joint stock firms, rural credit cooperatives as well as city commercial banks.
Financial Organizations in China Embrace e-CNY
As reported by a China-based journal, both small and large banks are embracing the e-CNY as they also seek to issue it to their customers. However, the e-CNY has not been distributed for general use yet. During the first phase of the pilot program, the PBOC, China’s apex bank, recorded massive transaction volume. While giving a report on the successful first trial, the PBOC also declared that it will be expanding the scope of the trial by introducing new instances during the second phase.
Also read:Other financial organizations within China are reportedly showing interest in the e-CNY, which reveals a growing acceptance of the CBDC despite concerns. In the past, privacy concerns were raised by experts, some of whom stated that the Republic of China plans to use its digital currency to spy on residents. But the PBOC has dissociated the e-CNY from these claims, while declaring that the CBDC was a response to the plethora of private payment services that have sprung up around the country.
Although the PBOC failed to disclose, another factor that instigated the e-CNY is cryptocurrencies. China has not failed to hide its displeasure for this asset class. Back in May, the Asian giant issued a ban against crypto mining, in a strong-willed bid to stop the adoption of cryptocurrencies. Authorities in China also claimed that crypto mining threatened its carbon-neutral stance and electricity grids within the country due to pollution and excessive consumption, respectively.
Blockchain-based Patents On the Rise in China
China has had a CBDC in the picture since 2014 after its president touted the blockchain technology as a relevant innovation. Since then, different Chinese companies have been applying for blockchain-related patents and registered businesses under the term ‘blockchain.’ That also explains why China is far ahead in the CBDC game.
Pushing an internalization agenda through the e-CNY, China is also aiming to displace the US dollar as the world’s reserve currency. China will rival the spread of crypto assets in China with the e-CNY. Interestingly, plans to introduce the CBDC during the 2022 Beijing Olympics were also proposed by the People’s Bank of China.
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