• Wed. Jun 22nd, 2022

China tests national digital currency | News | DW

ByHazel R. Lang

Jun 17, 2022

The Chinese digital yuan can now be used for wealth management products and bank loans. This move by the Chinese central bank expands the use of digital currency beyond the purchase of consumer goods.

e-CNY is currently used in more than 20 cities across China. Although e-CNY is still in the pilot stage, the scope of the trial has been gradually expanded since its debut in 2020.

The Chinese government introduced e-CNY as Beijing cracked down on bitcoin and other cryptocurrencies, seeking instead to provide a government-sanctioned and controlled digital alternative.

How is e-CNY used?

E-CNY users are already using the extended features of the digital currency.

Last week, a man bought a car insurance policy using e-CNY, according to reports from a Chinese government-funded newspaper. Securities Time.

Additionally, China Construction Bank Corporation (CCB) is now allowing customers to use e-CNY for wealth management products on its mobile app, according to Reuters news agency.

China plans to further expand the use of the digital yuan.

“In the future, the digital yuan may be applied in more scenarios such as medical treatment, education, and finance,” wrote Zhang Ming, a senior economist at the Chinese Academy of Social Sciences, in an online publication. line in China.

China’s central bank says the e-CNY reached a transaction volume of 87.6 billion yuan ($13 billion; €12.4 billion) at the end of 2021.

E-CNY builds on private sector digital efforts

Digital wealth management tools like e-CNY are not new in China. Alipay, a digital payment service provider owned by the Ant Group, has offered similar services since 2013, when it launched its own digital money market fund.

Despite the success of its fintech giants, China has pushed to expand the use of the digital yuan.

Apps like Alipay require a mobile phone and the internet. China’s population is highly mobile with more than 990 million people using mobile phone services in 2021, according to GMSA, but World Bank research indicates that 20% of China’s population does not have internet access.

Earlier this year, China started issuing cards, with a small LCD screen that tells users how much money is in the e-CNY account. These cards can be used without an Internet connection.

Mechanisms like this fill in the gaps fintech companies can’t by providing “secure, government-backed, free or near-free, immediate money transfer,” expert Richard Turrin told DW. Chinese digital currency.

Edited by: Mark Hallam


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