The People’s Bank of China (PBOC) reported significant growth in the adoption of the central bank’s digital currency (CBDC), the digital yuan, with 180 million individual wallets opened as of July 31, local media reported on October 11.
The CBDC has been used to conduct transactions worth more than 7.3 trillion yuan ($1 trillion) in pilot regions. This rapid expansion reflects China’s ambition to strengthen its financial system and promote the renminbi’s global influence through the digital economy.
Mu Changchun, director of the Digital Currency Research Institute at the PBOC, outlined the strategic importance of the digital yuan, or e-CNY, in a recent statement, highlighting its role in advancing China’s status as a financial powerhouse.
Mu said the growth of the e-CNY is in line with President Xi Jinping’s vision of a robust financial system that supports national development and international competitiveness.
Two-layer system
The e-CNY operates on a two-tier system, with the PBOC overseeing central management and commercial institutions that handle distribution. The structure ensures flexibility and efficiency, as the currency integrates both account-based and token-based models.
This enables a variety of payment methods, including offline transactions where internet access is limited. Mu emphasized that this system optimizes financial processes and reduces transaction costs, while improving financial inclusion.
Since its introduction in 2014, the digital yuan has expanded its applications across multiple sectors. Mu highlighted its increasing use in retail, healthcare, public services and more, contributing to a more streamlined and secure monetary system.
The e-CNY also helps China reduce its dependence on traditional financial infrastructures, paving the way for more seamless integration into the global digital economy.
Cross-border reach
In addition to domestic progress, China has actively pursued cross-border collaborations to improve the international use of the digital yuan.
The PBOC has worked with central banks in Thailand, the UAE and Hong Kong, setting up multilateral digital currency bridges to improve the efficiency of cross-border payments.
These initiatives seek to address issues such as high costs and low transparency in international payments, positioning the digital yuan as a leader in global CBDC efforts.
Mu reaffirmed the PBOC’s commitment to further innovation, with plans to expand the role of e-CNY beyond retail payments to broader financial services, including wholesale transactions and lending.