An ex-official of the People’s Bank of China (PBOC), which is the central bank of China, has stated his dissatisfaction with the fact that China’s digital yuan is not being used very often.
According to a report published on December 28 by Caixin, Xie Ping, a former research director at the PBOC who is now a finance professor at Tsinghua University, made critical public comments about China’s central bank digital currency (CBDC) at a recent university conference. Xie Ping’s comments were made public during the conference.
Xie pointed out that the total value of all transactions conducted with digital yuan had just surpassed $14 billion (100 billion yuan) in October, two years after the debut of the currency. ” The results are not what I would have hoped for,” he stated, adding that “use has been minimal and very inactive.” In spite of the quick extension of the trials by the government and the introduction of additional wallet features in an effort to entice users, the People’s Bank of China said in January that only 261 million people have set up an e-CNY wallet.
According to a research published by China UnionPay in 2021, this number is much lower than the estimated 903.6 million individuals that use mobile payments in China.
The former official from the central bank stated that the use case of e-CNY “needs to be changed” from its current use as a cash substitute and that it should be opened to other uses such as the ability to pay for financial products or connected to more payment platforms in order to increase adoption.
He made the comparison by stating, “He likened the digital yuan to other third-party payment systems in the nation such as WeChat Pay, Alipay, and QQ Wallet, which allow for investments, lending, or borrowing.
Although there are some third-party financial applications that are compatible with e-CNY, they do not see much usage because, as Xie said, “people are habituated to” using the original service and “changing is tough.”
This level of criticism of Chinese government efforts coming from former officials is quite unusual, and it suggests that the nation may be having significant difficulty gaining momentum on its CBDC project.
The administration has moved quickly to extend e-CNY trails to a total of four additional cities, the most recent of which was in December.
It was decided to add new features to the e-CNY wallet app in the hopes of attracting users in time for the Chinese New Year. One of these new features is the capability to send digital versions of traditional red packets or red envelopes (hongbao) containing money. This is a common custom that is observed during celebrations.
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