📌 China’s CBDC: The Rapid Growth of Digital Yuan
China’s digital yuan (Digital Renminbi) has successfully gained popularity, surpassing a transaction volume of 32 trillion won. Since 2021, China has initiated crackdowns on cryptocurrency usage and has been actively promoting its own CBDC, the digital yuan. Currently, the Chinese government has over 13 billion digital yuan in circulation.
📄 CBDC: Central Bank Digital Currency Explained
CBDC (Central Bank Digital Currency) is a digital form of cash issued by the central bank, replacing physical cash with a digital form. CBDC is electronically used through digital payment systems, providing security and swift payment processing capabilities.
🔥 Reasons for China’s Rapid Popularization of CBDC: Population Size and Digital Advancement
The success of the digital yuan is related to the increase in China’s internet users. China has surpassed 900 million internet users, leading to the successful emergence of e-commerce and online-offline platforms utilizing mobile payments and digital payment systems.
China initiated an official digital yuan pilot project known as DCEP (Digital Currency Electronic Payment) in major cities and is conducting research to expand the use of digital yuan. DCEP utilizes secure technologies like blockchain and represents a fully digitized yuan. China’s bold moves are expected to align with the evolution towards a digital society, where mobile payments become ubiquitous and cash usage decreases.
Moreover, the e-CNY application, also known as digital yuan (e-CNY), is mainly used for domestic retail payments and has garnered interest in Hong Kong, exploring other applications such as cross-border payments. China’s introduction of digital yuan can be seen as a daring attempt to adapt to the rapidly evolving digital society.
Furthermore, China’s national support for CBDC in terms of funds and infrastructure has enabled its rapid growth.
🔥 Reasons for China’s State-Policy Support for CBDC
Through CBDC, the Chinese government gains stronger control over the financial system. China aims to promote the international use of its national currency through CBDC and, by utilizing digital yuan in transactions with other countries, attract more international capital inflow into its financial market.
Finally, China is introducing CBDC to strengthen control over the cryptocurrency market. Due to the high volatility and impact on financial markets, the Chinese government seeks to enhance regulations using CBDC for stable control.
Additionally, China harbors ambitions to undermine the dollar’s dominance and lead the world in currency supremacy.