Ex-official of the Central Bank of China: the Chinese were not interested in the yuan figure

A former official at the People’s Bank of China (PBOC), the country’s central bank, expressed disappointment that China’s digital yuan has been little used by the public and has been coldly received.

According to a December 28 Caixin report, Xie Ping, a former director of research at the PBOC and current professor of finance at Tsinghua University, made critical public comments about China’s central bank digital currency (CBDC) at a recent university conference.

Xie noted that cumulative digital yuan transactions topped $14 billion (100 billion yuan) in October alone, two years after launch.

“The results are not perfect,” he said, adding that “utilization has been low and extremely inactive.”

Even though the government quickly expanded test versions and new wallet features to try to attract users, a January PBOC report says that only 261 million users have created an e-CNY wallet. In comparison, according to the China UnionPay 2021 report, about 903.6 million people regularly use mobile payments in China.

The former central bank chief said the use case for e-CNY “needs to be changed” from its current use as a substitute for cash and open up to other uses, such as the ability to pay for financial products or connect to more payment platforms to accelerate adoption.

He compared the digital yuan to other third-party payment systems in the country such as WeChat Pay, Alipay and QQ Wallet, which allow investments, lending or loans. The official said they have “formed a payment market structure that satisfies the needs of everyday consumption.”

Some third-party financial applications are compatible with e-CNY, but they are of little use, as Xie said that “people are accustomed” to using the original service and making changes is “difficult.”

Such criticism of the Chinese government’s initiatives is rare from former officials and indicates that the country may be seriously fighting to support its initiative to promote the CBDC.

Most recently, in December, the government quickly expanded e-CNY to four new cities. Earlier in September, it was expanded to include Guangdong, its most populous province, and three others.

New features have been added to the e-CNY wallet app to attract users to the Chinese New Year, adding functionality to send digital versions of traditional red packets or red envelopes (hongbao) with money, a popular custom during the holidays.

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