April 28, 2021
Rollout of the digital yuan
28. That’s the number of cities where China’s about to test drive the digital yuan. Our new animated map shows the rapid expansion planned for the mainland over the next eight months.
Note that even the smallest dot represents a population close to that of New York City. And we’ve only been able to identify 13 cities on our map – since the People’s Bank of China (PBOC) is keeping the other 15 under wraps. We’ll keep tracking the rollout to see how quickly the PBOC scales up the next phase of its pilot before the Beijing Winter Olympics.
Scale is key. Even though nearly all of China’s major cities will get to sample the digital yuan soon, only a small amount of currency is in circulation in each city. Estimates suggest less than 150 million RMB is currently being distributed ($USD 23 million). The PBOC had indicated this money has changed hands over 4 million times to date but it still only totals 0.01% of the total money supply in China.
The question for the rest of 2021 is how much more money is China going to put into the system. China officially launched its Digital Currency/Electronic Payments project (DC/EP) in 2017, after party officials came to believe cryptocurrencies and stablecoins could threaten the Chinese financial system. The increased use of Alipay and WeChat convinced Chinese regulators they needed a firmer grasp of payments within their own borders. Chinese leaders may also be seeking to reduce reliance on US financial institutions and oversight.
Chinese officials described the currency as having “controllable anonymity”, potentially giving the government far-reaching powers to identify money laundering and other illicit activity, but also individual spending.
China has also begun cross-border testing a bank-to-bank version of the digital yuan with the UAE,Thailand, and Hong Kong.
Meanwhile the US continues to lag behind in its own development of a digital dollar.
Learn more in our interactive database here:
Check out the new edition of our central bank digital currency tracker, we explore what 75 countries around the world are doing in the race for the future of money.
Related reading
At the intersection of economics, finance, and foreign policy, the GeoEconomics Center is a translation hub with the goal of helping shape a better global economic future.