The value of cryptocurrencies is no longer in question today. With a market capitalization of over $ 900 billion, this risky market is attracting the attention of many around the world.
While most governments are still slow to regulate the industry, some are far more aggressive than others. China is a perfect example of this: the country recently launched a project called e-CNY.
What is e-CNY?
The digital Yuan or e-CNY is essentially a digitized version of the official Chinese currency, the Renminbi (RMB). It is a digital currency that has been used as an electronic payment method for a few months. It is issued by the Central Bank of China and is mainly used for small-scale, high-frequency purchases and retail transactions.
Since the e-CNY is part of the country's monetary base, it is an integral part of the cash in circulation in China. Furthermore, it has the same value as the renminbi.
The rapid growth of the e-CNY in the Chinese market
The e-CNY can only be used by a specific application that makes up its portfolio. The application was launched on the Android and iOS platforms in early January this year. It has quickly become one of the most popular applications in the country.
In fact, just two weeks after its launch, it is estimated that about a fifth of the Chinese population had already downloaded the application. A deeper analysis confirms that users carried out transactions worth 87,5 billion yuan (13,78 billion dollars) in that period.
In an interview, People's Bank of China (PBOC) head of financial markets, Zou Lan, explained that the origin of this surprising development is quite simple. The government has spent more than two years experimenting with the use of the digital yuan in some large cities across the country.
Initially, citizens had to participate in a random draw to access it as users, but then the Chinese Central Bank got into the right gear. It proceeded to make the e-CNY wallet available on iOS and Android throughout China.
The gradual expansion of the project in China
Although the e-CNY wallet is available on several Chinese app stores, it is not accessible to everyone. In fact, only users residing in one of the cities included in the list of pilot cities can use the application.
According to several reports, the Chinese government plans to expand the e-CNY trial to four new provinces, including Guangdong, which is likely to be the most populous. The main purpose of this initiative is to stimulate the adoption of this new payment system among a greater number of users.
Therefore, in addition to Guangdong province, e-CNY will also be available to residents of Jiangsu, Hebei and Sichuan provinces. According to the Deputy Governor of the Central Bank of China, Fan Yifei, the e-CNY project represents an important infrastructure in the digital age.
Previously, tests for the use of the digital yuan took place in the cities of Shenzhen, Suzhou, Xiongan and Chengdu. However, despite this very small circle of users, the project has been very successful in terms of adoption and use. At the end of 2021, transactions are estimated to have reached the equivalent of $ 14 billion.
Towards Chinese rule?
According to expert reports, the availability of the e-CNY wallet on the Android and iOS platforms has dramatically increased the scope of transactions in e-CNY. It is therefore clear that the government, through its Central Bank, will work to expand the project to more cities, while strengthening privacy protection and crime prevention.
For many members of the US government, the Digital Yuan project is just another surveillance tool developed by China. They fear, however, that the e-CNY will eventually replace the dollar in terms of global dominance.