One of the first proponents of central bank digital currencies (CBDCs) when countries were still in the discussion phase on whether or not to embark on a digital currency route, China is the first in the world to roll out a commercial CBDC for large-scale testing and has come the closest to launching an official digital yuan than any of its counterparts. Named the Digital Currency Electronic Payment (DCEP), China began the first phase of testing across four cities in April and preliminary results over four months of testing were revealed by the People’s Bank of China (PBOC).
Speaking at virtual conference Sibos 2020 on October 7, PBOC Governor Yifei Fan announced that the bank has successfully conducted the trials. It has opened more than 100,000 consumer digital wallets, and also nearly 9,000 corporate ones, recording 3.1 million transactions which amounted to over $160 million USD in value.
“To protect fiat currency from crypto-assets and safeguard monetary sovereignty, it is necessary for the central banks to digitize bank notes through new technologies,” said Fan. “In cross-border payments, we could achieve interoperability and address the trilemma – low costs, low risks, high efficiencies – by using digital fiat currency,”
China is taking the future implementation of the DCEP seriously and for good reason, as taking this crucial step can open gateways to innovation in payments, allowing China to leverage on efficient cross-border payments and potentially further entrenching its global economic lead ahead of its competition.
Moreover, the pilot phase has proven that there are numerous use cases for the DCEP. The current phase of testing alone has unveiled 6,700 use cases from accessing public services, shopping and transportation to even digital cash rewards. If the next phases of testing go well, the DCEP may be ready for use at the 2022 Beijing Winter Olympics.
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