China’s digital yuan has witnessed tremendous growth as the central bank ramps up its CBDC pilot in the last one-and-a-half year. According to the Chinese central bank governor, Yi Gang, within that period, the digital yuan has facilitated nearly $250 billion in transactions.
At a conference in Singapore held on July 19, Yi Gang disclosed that China’s central bank digital currency (CBDC) transacted 1.8 trillion yuan at the end of June.
Digital Yuan Gains Traction, Records Nearly 1 Billion Transactions
According to the central bank governor, the digital yuan pilot recorded 950 million transactions from about 120 million wallets since its rollout in January 2022. That brought the average transaction amount to approximately $250 billion. Also, Yi claimed that about $2.3 billion (16.5 billion digital yuan) was in circulation at the end of June.
Despite its accelerated adoption rate and increased use cases, the digital yuan only represents 0.16% of China’s monetary supply, according to Reuters’ July 19 report. That suggests the CBDC’s adoption is still minimal relative to China’s population of over 1.4 billion people.
So far, the digital yuan has found utility in mostly domestic retail payments except for a few trials in Hong Kong.
China Ramps Up Efforts To Promote CBDC Adoption
A July 18 report by South China Morning Post disclosed that the Bank of China (Hong Kong) started exploring another cross-border payment scheme for Bank of China customers, and they conducted the pilot at selected retail stores in Hong Kong.
The central bank initiated the pilot to promote the digital yuan’s cross-border payment applications. The trial is now the third cross-border trial of China’s central bank digital currency in Hong Kong, according to South China Morning Post’s report.
China has been keen on promoting its CBDC adoption since commencing the pilot last year. In one of the trials last year, the Bank of China (Hong Kong) launched a program to promote the digital yuan in Hong Kong. The program encouraged customers to set up a Bank of Chain e-CNY (digital yuan) wallet to receive $14 (100 yuan) for shopping at the Hong Kong supermarket chain called U Select.
Furthermore, in January, the Chinese central bank added smart contract functionality to the digital yuan to expand its use case. According to a local crypto news outlet, the central bank launched the Smart Contract feature on the Meituan app, a Chinese app that facilitates retail and food delivery services.
When the app users place an order and pay with the e-CNY wallet, the Smart Contract stimulates keyword search and identifies the items in their order. Users who buy items on the keywords list for a day qualify for raffle draws to win prizes.
These efforts have helped the central bank in boosting its digital yuan adoption. The $250 billion in CBDC transactions is a more than 70% increase from the numbers recorded by the central bank in August 2022.
However, this amount is still a drop in the ocean compared to the transaction volume processed by some of the world’s largest public blockchains. For instance, Bitcoin, a public blockchain, processes thousands of transactions daily and processed $8.2 trillion in 2022 alone, according to Finbold’s report.