Max E.Fri, Apr 8, 2022 3:00 PM
WeChat Joins Digital Yuan Pilot Program
The Electronic Chinese Yuan, also known as the Digital Yuan and officially referred to as the Digital Currency Electronic Payment (EDPM), is a digitized version of China's official currency, the Yuan (RMB). It is issued by China's central bank, the People's Bank of China (PBOC). The digital yuan is intended primarily for use in frequent, small retail purchases and transactions. e-CNY is a part of the country's monetary base.
Owned by tech giant Tencent, the app, known as Weixin in China, can enable a massive amount of transactions with China's state digital currency. Alipay from Alibaba and WeChat from Tencent now account for over 90% of mobile payments in China. WeChat monthly active users reached 1,268.2 million in Q4 2021.
Joining the e-CNY pilot program will expand the use of the digital yuan in international trade and supply chains in integration with other technologies. Another important goal of introducing e-CNY is to increase the involvement of the Chinese population in the system of non-cash payments. While China is the world leader in mobile wallet adoption, 20% of the country's adults are deprived of bank accounts.
WeChat users from regions of the digital yuan pilot program will be able to use e-CNY as a means of payment. The advantages include the absence of intermediaries, instant payment, the option to pay without an Internet connection, and the opportunity to program the digital yuan for a strictly intended use (for example, paying for food or transportation costs).
The People's Bank of China first began testing the e-CNY app in April 2020, when internal testing was launched in four cities. Since then, this pilot program has gradually expanded through invitations and cash incentives. At the end of 2021, the volume of transactions with e-CNY reached 87.57 billion yuan (about $13.68 billion), 261 million unique digital wallets were registered.
Recently, PBOC announced the expansion of the digital yuan testing program. Additional Chinese provinces and cities were included in the pilot program.
Along with conducting a domestic pilot program, China is participating in projects of cross-border digital yuan payments in partnership with the central banks of UAE, Thailand and Hong Kong.