The digital yuan is being pushed by the Chinese government for a broader use. The e-CNY is issued by the People’s Bank of China and the regulator retains full control of the virtual asset. The digital renminbi, China’s CBDC, has successfully passed numerous trials and tests. Notably, the Chinese regulator is a few steps ahead of many other world’s leading financial watchdogs in the CBDC race. China is now making every effort to expand the use of its virtual national currency among the broader population. Tech giants Alibaba and Tencent are already on board. The country’s two dominant payment systems Tencent’s WeChat Pay and Alibaba’s AliPay will accept the digital yuan as a means of payment, the companies announced. A national roll-out data remains unknown, but China’s authorities are doing their best to popularize the e-CNY. “It feels to me like they’re now ready to push this out wider,” Linghao Bao, an analyst at consultancy Trivium China, said.
The question is whether people are going to use the e-CNY on a regular basis as there are some technical aspects. Thus, to use WeChat or AliPay, people are required to link their bank accounts to the app. However, to pay in the digital renminbi, they will need to register separate accounts and link them to their WeChat or AliPay. “The big question we have is whether consumers are going to use this or not. To me, there is no strong incentive for consumers to switch [from their current systems]. I don’t see any strong incentive because there is still friction to use digital yuan. You have to download the app, sign up, then top up your wallet. I’m not sure consumers want to go through these extra steps,” Mr. Bao concluded.
