Digital yuan daily news

Every day, there are numerous news updates about the pilots for China’s central bank digital currency (CBDC). Here’s a roundup.

September 7, 2021

Technology: Bank of China unveils Forex ATM

It will soon be possible to directly exchange 17 foreign currencies for digital yuan following the unveiling of the Bank of China’s Forex ATM.

The ATM was launched yesterday at the International Trade Services Fair to enable the use of the digital yuan at the Beijing 2022 Winter Olympics. Foreign athletes will easily be able to spend digital renminbi without opening a bank account, although identity verification will be required. The digital currency will be stored on a hardware wallet issued from the exchange machine.

Other digital yuan exhibits at the Trade Fair included a demonstration of offline payment technology. 

Use cases: Beijing expressway

The customers of six major state-owned banks will soon be able to use the digital yuan for expressway and parking payments.

Last week, six banks, including the Bank of Communications and the Beijing branches of China Construction Bank and China Postal Savings Bank signed an agreement with Beijing Capital Highway Development to implement the digital yuan for highway tolls.

Use cases: Transport applications

The digital yuan can be used for subway payments, bicycle rental and beverage vending machines across the country.

Meituan is cooperating with the Bank of China to launch an offline NFC payment function to hire its bicycles. Unlike the previous method of scanning the QR code, users with a digital yuan hard wallet can unlock the bicycle while offline and without a phone.

As of June 30, 2021, there were over 1.32 million pilot scenarios for the digital yuan. Its use cases have expanded beyond retail, and applications for medical services and tuition payments are being developed.

Policy: Latest stats on Chinese cash usage

In August, a report published by the People’s Bank of China explored Chinese cash usage. In the past two years, 77.02% of the respondents used mobile phones to make payments. In contrast, 71.32% had used cash.

The report also found that demographics played a key role. The older the age group, the higher proportion of cash payments. 85.71% of 60-70 year olds used cash for payments in the past two years compared to 66.87% in the 18-30 age bracket.

Policy: Four misunderstandings re digital yuan

With China’s rapid digital yuan progress, a Southern University of Science and Technology professor clarified four common misunderstandings.

1. Bitcoin or Ethereum are neither national payment methods nor currencies. This contrasts with a CBDC, a digital form of cash and thus serves as legal tender.
2. The digital yuan is not a standalone currency in itself. It is the result of digitization and technology advancement rather than a brand-new currency.
3. The digital yuan and the internationalization of the renminbi are not to be conflated. The digital yuan might be developed in parallel with renminbi internationalization initiatives, but there’s no causal relationship.
4. Digital currency has major potential for monetary policy goals. New digital technology could enable direct loans or direct stimulus methods for the central bank.