Trials for the use of the Digital Renminbi have seen rapid expansion since their launch by the People’s Bank of China (PBOC) in April last year.
As of 30 June 2021 there were a total of 1.32 million Digital Renminbi trial sites around China, according to data from the “China Digital Renminbi Research and Development Progress White Paper” (中国数字人民币的研发进展白皮书) released by PBOC on 16 July.
These trial sites involve the use of the Digital Renminbi for daily expenditures, food and beverage services, transportation, retail consumption and government administrative services.
PBOC data further indicates that there are over 20.87 million individual Digital Renminbi wallets in China, as well as over 3.51 million public wallets.
Since the offical start of trials in April 2020 there have been more than 70.75 million transactions using Digital Renminbi wallets, for a total sum of approximately 34.5 billion yuan.
Despite the rapid growth in the scope of Digital Renminbi trials over the past year however, PBOC officials have not yet set a specific date for its official release.
“PBOC will continue to steadily advance Digital Renminbi R&D trials, and has not set a timetable in advance for its release,” said Fan Yifei (范一飞), PBOC deputy-governor.
Fan also highlighted various “pressure and challenges in Digital Renminbi trial work” since its launch, including:
- Further raising the convenience and inclusion of the Digital Renminbi, and further increasing site coverage.
- Continuing to strengthen the security of the Digital Renminbi, and establish security systems including a reliable, multi-tier online protection system, cryptographic algorithm system and secure computing and storage system. Fan pointed in particular to the application of new technologies such as quantum computing to the Digital Renminbi’s cryptographic algorithms.
- Further observing the impact of Digital Renminbi verifications, and giving full consideration to the objective impacts of widespread fintech usage and economic digitisation.
- Establishment of a complete regulatory system and standards for the Digital Renminbi.
Fan said that the next steps for Digital Renminbi trials would include:
- Timely and moderate expansion of the scope of trials. Achieving full coverage of the application sites of selected trial regions, and creating a Digital Renminbi ecosystem, as well as expanding the scope of participating R&D institutions and trial areas.
- Researching and improving related systems. Actively driving the amendment of key laws and regulations such as the People’s Bank of China law. Researching and formulating administrative measures in relation to the Digital Renminbi. Strengthening Digital Renminbi personal information protections, and establishing a complete Digital Renminbi full-procedural secure management system.
- Strengthening research into key problems, deepening research and assessment of the deeper impacts of statutory digital currency on monetary policy, the financial system and financial stability. Actively participating in statutory digital currency international exchanges, and using open and accommodating methods to explore and formulate standards and regulations for statutory digital currencies, and jointly driving the growth of statutory digital currencies.
Mu Changchun (穆长春), head of PBOC’s Digital Currency Research Institute, pointed out that the Digital Renminbi and traditional forms of electronic payments will “co-exist over the long-term,” given that they are “situated at different vectors, and are complementary as well as disparate.”
“The Digital Renminbi is a new general form of payment provided to the public that raises the diversity of payments tools, and helps to increase the efficiency and security of the payments system,” said Mu.
“The Digital Renminbi is mainly based upon cash-type payments vouchers – M0 – and is mainly used for retail payments. Its main goal is to raise financial inclusion, and makes reference to payments technology and experiences while also forming a beneficial supplement to them.”
Financial institutions currently participating in Digital Renminbi R&D trials include the big six state-owned lenders (Agricultural Bank of China, Bank of China, Bank of Communications, China Construction Bank, ICBC and Postal Savings Bank of China), as well as private digital lenders WeBank and MYBank.