China’s digital yuan roared out of the gate, but stumbling blocks could give it pause
Corruption and a slow adoption of the e-CNY risk undermining the groundbreaking progress that China’s digital currency has made over the past decade
China’s top anti-corruption watchdog has accused Yao, who was the inaugural director of the PBOC’s institute overseeing digital currency research, and later head of the securities regulator’s tech-supervision department, of taking bribes through cryptocurrencies.
The country’s first cryptocurrency-related corruption case raises questions as to whether Beijing may slow the pace of the digital yuan’s roll-out to strengthen internal supervision.
Those pilot tests have been extended to 26 regions across 17 provinces, but China’s central bank has given no timetable for an official launch.
“We do have some bottlenecks in adopting the digital yuan today,” said Charles Chang, director of the Fintech Research Centre at Shanghai-based Fudan University.
He explained how existing online payment platforms such as Alipay and WeChat Pay “have done so well that users are reluctant to switch to a new option when they already have such handy tools”.
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Chang predicted that Beijing’s push for its digital currency “will neither stall nor run aground”, as it aligns with a global trend of CBDC development. Many countries see such initiatives as essential tools for reducing reliance on the US dollar in cross-border payments and challenging its financial dominance.
A survey published by the Bank for International Settlements in June revealed that 94 per cent of 86 central banks surveyed were working on CBDCs, with most focusing on retail and wholesale applications.