By George Ward
One of the early adopters of the central bank digital currency (CBDC) has included the digital asset in its cash circulation data for the first time. China has announced through its central bank that it added the digital Yuan as part of its currency calculation in December, which signifies the country’s first move.
e-CNY Now Part of Currency Circulation Data
According to the People’s Bank of China (PBoC), the country’s digital Yuan (e-CNY), which was already in circulation as of December 2022, has been included in the data on currency in circulation. Per a report from the central bank, the e-CNY in circulation in December amounted to $2 billion, approximately 13.6 billion Yuan at the end of last year.
Furthermore, as the custodian of both cash and bank reserves, the PBoC stated that its measure of money supply, also known as MO, surged by 15.3%. The rapid rise in the MO’s rate is the highest in 11 months, equating to 10.5 trillion Yuan by December 2022, with e-CNY making up 0.13% of the total increase.
Furthermore, the PBOC explained that adding the digital Yuan had not impacted any “notable changes” to the country’s currency supply. Governments worldwide began exploring the concept of the CBDC to counter the growing influence of privately issued virtual currencies.
However, China was one of the first countries to develop its centralized digital tokens. The communist nation partnered with other countries in the CBDC project and the Bank for International Settlement, an umbrella association comprising 61 central banks from different jurisdictions.
The CBDC pilot phase involves its live use in more than 26 large cities worldwide, involving 5.6 million merchants, as revealed by various news outlets.
China’s Rising CBDC Transactions
In an October 2022 report, the South China Morning Post (SCMP), citing data from the PBoC, revealed that the country had seen a surge in trading volume involving e-CNY. According to the SCMP report, transaction volume for the digital Yuan spiked by 14% in October 2022 from the 87 billion Yuan recorded toward the end of the previous year.
However, the data represents a massive slump compared to the 154% growth recorded between June and December 2021. At that time, China’s apex bank did not provide more updates on the number of active e-CNY wallets, which according to other data analytics, reached 261 million by the end of 2021.
Furthermore, the digital Yuan trading volume was dwarfed by the country’s top payment platforms like WeChat Pay and Alipay. Since last year, China has been steadily rolling out the e-CNY in various cities as part of its trial phase.
Thus far, it has involved 23 cities like Beijing, Shenzhen, and Shanghai in this trial phase. Plans are underway to include other critical economic hubs in the country as the race for full CBDC adoption continues to gain traction.
China hopes to key into the CBDC technology to curtail the rising use of cryptocurrency, which continues to soar despite a nationwide ban.