Digital Chinese Yuan to be Used in All Payment Scenarios

An important announcement came for the digital Chinese yuan, the Central Bank Digital Currency (CBDC) in the trial phase. Changchun Mu, head of the digital currency research institute of the People’s Bank of China (PBOC), the central bank of China, said on September 3 that the digital Chinese yuan (e-CNY) should be available in all individual payment scenarios.

Other payment methods, including WeChat, Alipay, commercial banks with mobile banking applications, and e-CNY operators, said Changchun Mu, head of the PBOC’s digital currency research institute, at the trade forum in Beijing, local media The Paper reported. He said wallet providers such as apps should be mindful of compliance requirements and obtain the relevant financial licenses.

The first step in the upgrade process is to use e-CNY as a means of payment for all its individual scenarios. In the short term, we can start by unifying QR code standards on a technical level to ensure barcode interoperability. In the long term, we will consistently implement the upgrade of payment instruments.

Mu’s remarks follow the central bank’s promise last year that it will roll out universal QR payment codes that allow consumers to pay by scanning a unified barcode. The use of QR code payment systems dominated by WeChat Pay and Alipay is currently quite common in China, and it is aimed to be used predominantly for e-CNY.

The PBOC has been testing e-CNY for some time and most recently launched a pilot in January 2022. Since the start of piloting e-CNY in late 2019, the PBOC has launched a digital Chinese yuan trial to at least 26 destinations in 17 prefecture-level cities and regions, including Beijing, Shanghai, Shenzhen and Suzhou, state media Xinhua reported in April. expanded. However, the e-CNY currently being tested in pilot areas across China is far from widespread adoption.

Mu also said that the existing interbank payment and settlement systems are working well and there is no need to replace them with the CBDC system. Mu added that at the wholesale level, e-CNY can be used for settlement as part of the financial market infrastructure, and smart contracts can be used to pay-for-delivery and pay-to-delivery, thereby increasing wholesale payment efficiency.