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(Kitco News) - The digital yuan is slowly establishing itself as a fixture in the Chinese economy and surrounding areas as the central bank digital currency (CBDC) has facilitated nearly $250 billion worth of transactions over the past year and a half.
According to statements made by People’s Bank of China (PBoC) governor Yi Gang at a conference in Singapore on Wednesday, 1.8 trillion yuan ($249.33 billion) worth of transactions have been conducted using the digital yuan as of the end of June.
This is a notable increase from last August when the cumulative amount of digital yuan transactions totalled just over 100 billion yuan.
Delving further into the numbers, Yi said the amount of digital yuan in circulation reached 16.5 billion yuan ($2.3 billion) as of the end of June – which still only represents 0.16% of China’s M0 money supply (cash in circulation) – while 950 million transactions have been conducted and 120 million digital wallets created.
“And you can see that right now the balance of e-CNY is only counting two-tenths of 1% of M0, so that the balance is very small, but with this kind of balance (we) support a big number of transactions, which means that the velocity is high and more efficient,” Yi said.
Recent announcements suggest that these transaction figures will only continue to increase as the PBoC is hard at work establishing new integrations and partnerships to expand the use of its CBDC.
According to a local media report, a collaboration between the China Merchants Bank and the Civil Aviation Administration of China has resulted in the creation of a platform that will allow companies and entrepreneurs to use the digital yuan to pay for business airline tickets. Passengers will also have the ability to use the CBDC to access new services through the platform.
The platform has already been used by Suzhou-based China Travel Service to purchase tickets on behalf of its clients, the report said.
And Chinese tourists are also seeing a growing number of uses for the digital yuan outside of China, as it's been announced that they can shop in Hong Kong with the CBDC as part of a digital yuan shopping festival launched this week.
According to a press release from Bank of China Hong Kong (BOCHK), they have partnered with its mainland counterpart to launch the “digital renminbi cross-border shopping festival event,” which will see 200 stores in Hong Kong accept the e-CNY.
The event began on Tuesday, and the Bank of China is offering shopping subsidies in digital yuan to encourage more citizens to take advantage of the opportunity. Designated merchants will have QR codes that shoppers can scan to access the subsidies. The BOCHK did not provide an end date for the event.
Businesses participating in the event include supermarkets, pharmacies, convenience stores, electronics stores, and many large retail chains, the release said. The BOCHK is also working on adding more merchants to the list.
According to Chen Guang, deputy general manager of the digital currency task force at BOCHK, the event coincides with the height of the Chinese tourist season in July and August, and the cross-border shopping festival was launched to attract more tourists to help boost local consumption.
BOCHK is the first Hong Kong-based institution to participate in the cross-border trial of digital yuan, which was launched in September.
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Shanghai is also looking to add the digital yuan to payment options supported in the region. In June, the Shanghai Clearing House – a financial services clearing counterparty under China’s central bank that handles bonds, interest rates, foreign exchange, credit, and commodities – announced the start of digital yuan clearing and settlement services for trading in commodities, marking another significant step in the institutional adoption of China’s CBDC.
The new service allows users to make cross-bank clearings and settlements on commodities with the digital yuan, with no fees charged for the services for the time being, according to a notice on the Shanghai Clearing House website.
The digital yuan is now being pilot tested in 17 provinces across the country, which includes 26 large cities and 5.6 million merchants. It is also supported by Alipay and WeChat Pay, two of China’s largest online payment platforms.
