China is nearing the launch of its Central Bank Digital Currency (CBDC) as more people sign up to it and create digital wallets.
About 140 million people had opened “wallets” for the digital yuan as of October and used it for transactions totaling around 62 billion yuan ($9.7 billion), Mu Changchun, head of the PBOC’s Digital Currency Institute, said at the Hong Kong Fintech Week conference on Wednesday.
The e-CNY has undergone a series of trials and appears to be in the final phase before it is rolled out, although Mu Changchun told Hong Kong’s “Fintech Week” conference there was no official launch date yet, but he disclosed how the digital currency will work.
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“Digital yuan operators can open four types of e-wallets for customers. The least privileged only requires a phone number, so would be anonymous even to the PBOC. Daily transaction values for this type of e-wallet holder would be capped at 5,000 yuan, with an annual cap of 50,000 yuan.
“The highest privileged e-wallet would need to be opened at a bank counter with personal identification, with no transaction cap,” he said.
He reiterated that these e-wallets would collect less transaction information than traditional digital payment services. The PBOC would not provide the information to any third-party or other government agencies unless stipulated by the law
By the end of June, China had more than 24 million individual and enterprise users with e-CNY wallets, with transactions worth about 34.5 billion yuan, the central bank said at the time
Central banks around the world are looking at developing CBDCs to modernize their financial systems, ward off competition from cryptocurrencies like bitcoin and speed up domestic and international payments.
China’s efforts are among the most advanced globally, and the country has been running various trials and pilot schemes of different payment scenarios since last year.
Mu said so far 1.55 million merchants could accept payments using eCNY wallets, including utilities, catering services, transportation, retail and government services.
China intensified its crackdown on cryptocurrency earlier this year, and totally declared it illegal in September, paving the way for its CBDC.
“The surge in usage of cryptocurrencies has disrupted economic and financial order and prompted a proliferation of money laundering, illegal fund-raising, fraud, pyramid schemes and other illegal and criminal activities,” the PBoC said then.
Although Mu said it is not yet certain when the eCNY will be launched, the growing number of people using it so far suggests that it wouldn’t be long.