According to a former China central banker, cumulative e-CNY transactions have only reached $14 billion in two years, and the results have been “not ideal.”
A former official of China’s central bank, the People’s Bank of China (PBOC), has expressed dissatisfaction with the country’s digital yuan.
According to a Dec. 28 Caixin report, Xie Ping, a former PBOC research director and current finance professor at Tsinghua University, made critical public comments about China’s central bank digital currency (CBDC) at a recent university conference.
Xie noted that two years after launch, cumulative digital yuan transactions had only reached $14 billion (100 billion yuan) in October. “The results aren’t ideal,” he admitted, adding that “usage has been low and inactive.”
Despite the government’s rapid expansion of trials and new wallet features to attract users, according to a January PBOC report, only 261 million people had set up an e-CNY wallet.
According to a 2021 China UnionPay report, this compares to around 903.6 million people in China who use mobile payments.
To increase adoption, the former central banker believes the use case of e-CNY should be expanded beyond its current use as a cash substitute and expanded to include other uses such as the ability to pay for financial products or connected to more payment platforms.
He contrasted the digital yuan with other third-party payment systems in China, such as WeChat Pay, Alipay, and QQ Wallet, which allow for investments, lending, or loans. He stated that they “have formed a payment market structure that has met daily consumption needs.”
Some third-party financial apps are e-CNY compatible, but they are rarely used because “people are used to” using the original service and change “is difficult,” according to Xie.
Such criticism of Chinese government initiatives is unusual from former officials, and it suggests that the country is struggling to gain traction with its CBDC initiative.
The government has rapidly expanded e-CNY trails, most recently to four new cities in December. It was previously expanded in September to include Guangdong, the most populous province, as well as three others.
In order to attract users in time for Chinese New Year, new features were added to the e-CNY wallet app, including the ability to send digital versions of traditional red packets or red envelopes (hongbao) containing money — a popular custom during festivities.
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