China expands the e-CNY test to 4 new provinces. The value of crypto-currencies is no longer to be demonstrated today. With a market capitalization of more than $900 billion, this risky market attracts the attention of many individuals around the world.
While most governments are still slow to regulate the sector, some are much more enterprising than others. China is the perfect example, as the country recently launched a project called e-CNY.
What is e-CNY?
The Digital Yuan or e-CNY is essentially a digitized version of the official Chinese currency, the Renminbi (RMB). It is a digital currency that has been used as an electronic payment method for a few months. It is issued by the Central Bank of China and is used primarily for small-scale, high-frequency retail purchases and transactions.
Since the e-CNY is part of the country's monetary base, it is an integral part of the cash in circulation in China. Also, it has the same value as the RMB.
The rapid growth of e-CNY in the Chinese market.
The e-CNY can only be used from a specific application that constitutes its wallet. The latter was launched on Android and iOS platforms at the beginning of January this year. It very quickly became one of the most popular apps in the country.
In fact, only two weeks after its launch, it is estimated that around a fifth of the Chinese population had already downloaded the application. Deeper analytics confirm that users transacted 87.5 billion yuan ($13.78 billion) worth of transactions with it during this period.
In an interview, People's Bank of China (PBOC) Chief Financial Markets Officer Zou Lan explained that the origin of this astonishing development is quite simple. Indeed, the government has spent more than two years experimenting with the use of the digital yuan in a number of major cities across the country.
If initially, citizens had to participate in a lottery first to access it as users, the Central Bank of China then shifted into high gear. It has made the e-CNY wallet available on iOS and Android throughout China.
The gradual expansion of the project on Chinese territory.
While it is true that the e-CNY wallet is available on various Chinese app stores, it is not accessible to everyone. Indeed, only users residing in one of the cities on the list of pilot cities are able to use the application.
According to various reports, the Chinese government plans to expand e-CNY trials to four new provinces, including Guangdong, probably the most populous. This initiative aims primarily to stimulate the adoption of this new payment system among a greater number of users.
So, in addition to Guangdong province, e-CNY will also be available to residents of Jiangsu, Hebei, and Sichuan provinces. According to the assertions of the Deputy Governor of the Central Bank of China, Fan Yifei, the e-CNY project represents an important infrastructure in the digital age.
Previously, digital yuan usage tests were held in the cities of Shenzhen, Suzhou, Xiongan, and Chengdu. However, despite this very limited circle of users, the project was very successful in terms of adoption and use. Towards the end of 2021, transactions are estimated to total the equivalent of US$14 billion.
Towards Chinese dominance?
According to expert reports, making the e-CNY wallet available on Android and iOS platforms has greatly increased the transaction scales in e-CNY. It is therefore obvious that the government, through its Central Bank, will endeavor to extend the project to more cities while strengthening privacy protection and crime prevention.
The bank also plans to study the impact that its use may have on the country's financial system. However, no official launch date for the project nationwide yet.
For many in the US government, this Digital Yuan project is just another Chinese-developed surveillance tool. They fear, however, that the e-CNY will eventually replace the dollar in terms of global dominance.
The cryptocurrency sector continues to impact many industries in the real world, but also the economy in general. This is also the case with the Metaverse which could for example radically change the landscape of the fashion industry in the future.
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