Banks around the world have been quickly flocking to the Chinese digital yuan (CBDC) pilot project, with over sixty now offering wallets for the official currency. The “DCEP” (Digital Currency Electronic Payment) was revealed in April 2020 as the world’s first mainstream official Central Bank Digital Currency (CBDC) system.
The participating banks are divided into two categories: the “City Banker Group”, which is comprised of five of the “big four” Chinese banks—Bank of China, Industrial and Commercial Bank of China, Agricultural Bank of China, China Construction Bank, and China Merchants Bank; and the “Innovation Banker Group” which consists of all other banks in the country. The Innovation Banker Group is further divided into “The Local Banks Group” and “The Foreign-funded Banks Group”.
The actual number of banks actively involved in the CBDC pilot project is hard to determine, due to the “gray area” of Chinese Central Bank’s policy. Generally speaking, the Chinese government is quite conservative when it comes to banking sector reforms, so transparency is often lacking in this regard. Sources outside of the mainland have reported that there are now at least sixty banks have applied for the wallet offering, with some estimates even higher.
The People’s Bank of China (PBoC) has not yet issued any official figures, though it has asked the participating banks to “speed up the implementation of the development and testing,” indicating the Chinese government’s seriousness in pushing this digital currency forward.
The DCEP currency is intended to serve various payment services, such as point-of-sale transactions, and P2P money transfers. It could eventually replace existing digital payment methods, like WeChat Pay and Alipay. Additionally, the digital yuan has the potential to create a new world of digital financial transactions, as the Chinese government is continuing to develop and test the currency for international use.
