Chinese eYuan / eCNY struggling for volumes

         As per newspaper reports, the transaction volumes of the Digital Yuan are not very encouraging.



China has been one of the first major economies to push forward the use of CBDC.

China first started pilot testing of e-CNY for selected regions and also made it available for use to foreign athletes at the Beijing 2022 Winter Olympics in February 2022.

Multiple Chinese city governments have given away millions worth of e-CNY to try to promote consumption around the holiday season.

Chinese cities launched digital yuan activities worth over 180 million yuan ($26.6 million) to promote consumption during the Spring Festival holidays, including subsidies, consumption coupons and other programs, according to media reports on Sunday.

Digital yuan or e-CNY, a component of China's currency, has been developing rapidly in recent years.

During the first Spring Festival holidays after China optimized its COVID-19 prevention measures, many local governments handed out coupons in the form of digital yuan to boost consumption.

For instance, Jinan in East China's Shandong Province and Lianyungang in East China's Jiangsu Province issued digital yuan coupons during the holidays.

Some local governments also used digital yuan to subsidize businesses to boost recovery, such as Shenzhen in South China's Guangdong Province, which handed out 100 million yuan to subsidize the catering industry in form of digital yuan.

Nearly 200 digital yuan activities were launched during the Spring Festival across China, and the activities were worth more than 180-million-yuan, domestic news site thepaper.cn reported.

The last few months has seen the government enact other targets and features to boost the usage of the CBDC.

On Feb. 1, senior ruling party officials in the city of Suzhous set a tentative key performance indicator for the end of 2023 of having 2 trillion-yuan ($300 billion) worth of e-CNY transactions in the city.

The target is ambitious considering cumulative e-CNY transactions only crossed 100 billion yuan ($14 billion) in October, two years after the CBDC’s launch.

In the latest report mentioning the amount of currency in circulation, the People’s Bank of China, or PBoC has included the country’s central bank digital currency (e-CNY). As per the financial statistics report for the year 2022, the PBoC said that there was a total of 13.61 billion digital yuan — worth roughly $2 billion.

Quote

Starting from December 2022, e-CNY in circulation has been included in the amount of currency in circulation (M0). At end-December, e-CNY in circulation stood at RMB13.61 billion.

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The circulation of the central bank’s digital currency has grown by 15.3 percent during the month of December 2022. On the other hand, China’s broad money supply for China stands at 266.43 trillion yuan.

The PBoC further added that the Digital Yuan hasn’t caused much notable changes to its growth rates. The 13.61 billion e-CNY in circulation represents only 0.13 percent of the 10.47 trillion yuan in circulation at the end of 2022.

         The Chinese Government – both central and local are taking multiple initiatives to boost eCNY volumes.

         The initiatives have yet to show positive results.

        Disclaimer: These are my personal views only. The bottom line is Safe ePayments. Nothing More – Nothing Less.

I am solely responsible for the errors if any.

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