- Transactions with China’s digital yuan hit almost $250 billion in June 2023.
- Since August 2022, the amount of transactions has increased by 13%.
- Although the number is high, it’s only 0.16% of China’s money supply.
Transactions using China’s digital currency hit almost $250 billion at the end of June. Dr. Yi Gang, President of China Society for Finance and Banking, spoke at a lecture organized by the Monetary Authority of Singapore (MAS) on 20 July about China’s digital currency advancement.
China’s digital currency, otherwise known as e-CNY, is the world’s first digital currency to be issued by a central bank. Dr. Gang said, “Transactions using China’s digital yuan hit 1.8 trillion yuan ($249.33 billion) in June, marking a jump from over 100 billion yuan as of August last year.”
China’s digital currency competes with Alipay and WeChat Pay, the most popular digital payment platforms in China. Around 9 in 10 Chinese online payment users were using those platforms between 2021 and 2022.
In a recent interview, Eswar Prasad, an economics professor at Cornell University, noted that although the numbers sound impressive, “it’s still very modest.” He added, “Only around $8 billion has been transacted over the last six months using the digital yuan compared to over $1.5 trillion through the Alipay platform just in 2020.” Dr. Gang also stated that e-CNY in circulation was only 0.16% of China’s money supply.
E-CNY was used mostly for domestic and retail payments during the pilot program, but as time progressed, banks expressed interest in “promoting it on a higher level by encouraging e-CNY transactions for corporate businesses, taxation, financial purposes, and government affairs.”
China’s digital currency wasn’t welcomed much in the west. CNBC shared American investor Kyle Bass’s opinion, “The digital yuan is the largest threat to the West that we’ve faced in the last 30, 40 years.” The People’s Bank of China addressed this concern and explained that the digital yuan wasn’t made to challenge the U.S. dollar. “We have said many times that it’s a natural process and our goal is not to replace (the) U.S. dollar or any other international currency.”
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