The Chinese central bank announces that transactions for the equivalent of 4.5 billion euros have already been carried out via its digital currency. She is also considering cross-border payments.
In a fifteen-page press release published on its website on July 16, the People’s Bank of China (PBOC) announces that, since it was put into circulation in the test phase at the end of 2019, its digital currency, the e-CNY – the more often called “digital yuan” -, was used in nearly 71 million transactions, for a total value of 34.5 billion yuan (4.5 billion euros). It is already present in the digital portfolios of more than 20 million individuals and 3.5 million companies.
By way of comparison, the European Central Bank (ECB) only announced on July 14 the launch of a study and design phase for a digital euro. This study phase, which should last two years, should not lead to full-scale tests before 2025. In China, the corresponding study phase dates back to the end of 2017, while the first studies on a controlled Chinese digital currency by the PBOC date from 2014.
The e-CNY is an official, state-guaranteed currency issued exclusively by the People’s Bank of China and has the same value as cash. Like the digital euro project, the e-CNY is called upon to coexist with cash. But in China, spurred on by financial technology giants like the leader Alipay, everyday electronic payments have experienced exceptional development: as of 2019, according to a study carried out by the POBC and mentioned in its press release, 66% of transactions and 59% of their total value was already realized through mobile phone applications, against 23 and 16% for cash and 7 and 23% with payment cards.
Testing began in the major urban centers of Shenzhen, Suzhou, Xiong’an, Chengdu and at future venues for the 2022 Winter Olympics. They were then gradually extended to six additional cities and provinces, including Shanghai, Hainan. , Changsha, Xi’an, Qingdao and Dalian. The e-CNY is intended to be used by all commercial banks or financial institutions and payment operators fulfilling technical and legal specifications.
Without a bank account and accessible to foreigners
According to the Chinese central bank, the establishment of the e-CNY meets three objectives. The first is to diversify the forms of money offered to the public, to meet the public demand for digital currency and to strengthen “inclusion” by providing means of payment, via digital wallets, to people who do not have access to it. bank account. The bank specifies in its press release that this last point is valid for non-residents going to China temporarily and not having a bank account in the country.
The second objective is, in the words of the PBOC, “to support fair competition, efficiency and security of payments for the retail trade”. Under this cryptic wording hides the desire not to leave the control of digital payments to Chinese private operators alone.
Finally, the third objective is to echo the various international initiatives and explore the possibility of using the e-CNY for cross-border payments. At the moment, the digital yuan is limited to domestic payments and its possible use across Chinese borders depends on many factors related to the convertibility of the yuan.
But at the end of March, during a seminar of the Bank for International Settlements – which brings together in its capital the 60 main central banks – Mu Changchun, director general of the digital currency institute of the PBOC, made proposals in order to start building a global architecture and regulations for digital currencies issued by central banks. He took the opportunity to suggest to his colleagues to think about the establishment of a “scalable exchange platform managed by DLT [distributed ledger technology, nom générique en anglais des technologies de type “blockchain”] or others ”. The PBOC has also initiated a project to study the issue with a unit of the Bank for International Settlements, as well as the United Arab Emirates, Thailand and the Hong Kong Monetary Authority.
In its press release, the PBOC declares that it “will actively respond to the initiatives of the G20 and [… que] subject to mutual respect for monetary sovereignty and compliance, [elle] explore pilot cross-border payment programs and work with central banks and relevant monetary authorities to set up exchange agreements and regulatory cooperation mechanisms ”.