China will advance the design and implementation of the digital yuan, or e-CNY, as the country ramps up efforts to digitize the renminbi, said Yi Gang, the governor of China’s central bank, on Tuesday.
China is the first major economy to create a central bank digital currency (CBDC), which is the digital form of the yuan. Pilot projects have been rolled out in cities like Beijing, Shanghai, and Shenzhen since late 2019.
The central bank has already partnered with fintech and e-commerce giants Ant Financial and JD.com to promote the use of its CBDC, and those who are in cities where pilot projects are organized can access their e-CNY wallet through Alipay, which has more than 1 billion users in China. Over 123 million people in China now have a “digital wallet” that can hold the CBDC, and the total transaction amount reached RMB 56 billion (USD 8.76 billion) in October.
“We will continue to prudently advance the research and development of digital yuan, improve its design and use,” Yi Gang, governor of the People’s Bank of China (PBoC), said on Tuesday at a virtual event organized by the Bank of Finland Institute for Emerging Economies.
The central bank will improve the linkage between digital yuan and existing payment apps. At present, digital payment services are mainly provided by private firms, which may lead to market segmentation and harbors the risk of privacy breaches, Yi said.
PBoC highly values users’ data privacy and will only collect the “minimal and necessary” information, Yi said. He also pledges that the bank will fully comply with privacy laws, and strictly control the storage and use of personal information.
Yi also said the digital currency gives the central bank a way to offer credible and safe payment methods, as well as ensure the stability of the country’s payment system. The digital yuan will be mainly used domestically in the context of retail payments, according to Yi.