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China adds the digital yuan to its official cash reports and now allows it to be used in wealth management
(Kitco News) - The People’s Bank of China (PBoC) has for the first time included its central bank digital currency (CBDC) – the e-CNY – in its official cash reports for the month of December. "Starting from December 2022, e-CNY in circulation has been included in the amount of currency in circulation," the central bank report said.
According to data released by the PBoC on Tuesday, the digital yuan accounted for 13.61 billion yuan (roughly $2 billion) in circulation by the end of December, which represents roughly 0.13% of the 10.5 trillion yuan in circulation.
The addition of the e-CNY to the data for the circulating money supply caused no “notable changes,” the PBoC said.
Central banks around the world have kept a close eye on the development of a CBDC in China as the world’s most populated country was an early mover in the race to develop digital fiat.
Exploration of the digital yuan initially began in 2019, and the public pilot program for the e-CNY launched in April 2020. After the initial trial was deemed successful, the program expanded to include four additional provinces in Sept. 2022.
In December, the PBoC revealed its intentions to once again expand the program to include the cities of Jinan in the Shandong Province, Nanning and Fangchenggang in the Guangxi Zhuang Autonomous Region, Kunming in the Yunnan Province, and the Xishuangbanna Dai Autonomous Prefecture in the near future.
The ongoing pilot program now involves 26 large cities and 5.6 million merchants, according to the South China Morning Post, and by the end of August 2022 had seen an accumulated transaction value of 100 billion yuan ($12.2 billion) from consumer spending, bank lending and cross-border payments.
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Expansion to the world of wealth management
According to a report from Shanghai Securities News, the digital yuan trial is now set to expand into the world of wealth management as the Hong Kong Stock Exchange-listed brokerage and investment bank China Galaxy Securities has announced that it will allow digital yuan-paying customers access to over-the-counter wealth management products.
The investment bank will initially roll out the service to a select group of customers within the pilot testing zone but plans to eventually make it available to customers across the country, allowing digital yuan holders to invest in public funds and other investment vehicles.
China Galaxy Securities has 13 million brokerage customers and is thus far the only brokerage firm to be granted permission by the PBoC to offer digital yuan holders the ability to purchase securities.
The e-CNY has also been adopted into an education-related endeavor where citizens can use a “digital yuan non-tax payment channel” to pay local authorities for services outside the scope of local taxation – such as kindergarten tuition fees.
According to Zhejiang Online, the new endeavor is a collaboration between the Zhejiang Provincial Department of Finance, the Hangzhou Gongshu District budgetary authorities, and a branch of the Industrial and Commercial Bank of China.
In addition to the non-tax payment channel, there are also several separate channels currently in operation that allow citizens in Hangzhou to pay their local taxes using the digital yuan.
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