Application of digital renminbi to speed up

Wider application of the digital renminbi, or e-CNY, in more scenarios, ranging from daily consumption to cross-enterprise transactions and public services, will accelerate the development of the electronic version of the currency issued by the People"s Bank of China, China"s central bank, experts said on Monday.

That will help unleash the e-CNY"s potential role in facilitating China"s economic upgrades, as well as global trade and investment growth, they said.

Their comments came following a decision by authorities in Changshu, a county-level city in Jiangsu province, to pay civil servants and people working for public institutions and State-owned enterprises in e-CNY starting from next month.

"The moves are not a surprise. Jiangsu as a pilot region has made remarkable progress in the application of the e-CNY, and people there have become quite familiar with e-CNY application scenarios covering many key aspects of their daily life," said Dong Ximiao, chief researcher at Merchants Union Consumer Finance Co.

"As the application of the digital renminbi develops to become more mature, wider use of the e-currency will help to increase the safety, stability and convenience of China"s payment system, making the digital renminbi an important part of the country"s new infrastructure for the digital economy," he added.

China started creating the digital version of the renminbi in 2014 and commenced pilot use of the e-CNY in late 2019. So far, the program has 17 trials.

According to Zhou Maohua, an analyst at China Everbright Bank, the application of the e-CNY has been continuously expanding among major enterprises and public institution users for large-scale transactions and to more regions.

It has already been widely used among individual users in small-scale payment scenarios across sectors such as retail, catering and hospitality, he said.

Data from the central bank shows that the value of digital renminbi in circulation reached 13.61 billion yuan ($1.97 billion) by the end of 2022.

Zhou also said that China"s fast growth in cross-border e-commerce, together with the development of the digital renminbi, could provide ample international cooperation opportunities for use of the e-CNY in trade and investment.

According to Song Ke, deputy director of the International Monetary Institute at Renmin University of China, thanks to the adoption of smart contract technology, the e-CNY can carry out automatic payment transactions in accordance with the terms and rules agreed by the transaction parties under the premise of ensuring security and compliance. That improves the flexibility of the digital renminbi to be used in more scenarios.

However, Dong, from Merchants Union Consumer Finance, suggested that China should make greater efforts to address obstacles to the application of the e-CNY, such as identifying the responsibilities and rights of all the parties involved.

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