China’s digital yuan — its central bank digital currency (CBDC) in trial — must be available in all retail payment scenarios, a Chinese central bank official said Sunday.
Changchun Mu, head of the digital currency research institute at the People’s Bank of China (PBOC), said at a trade forum in Beijing that wallet providers — such as WeChat, Alipay, commercial banks with their mobile banking apps and other payment apps including e-CNY operators — must remain wary of compliance requirements and obtain relevant financial licenses, local media The Paper reported.
“The first step in the upgrade process is to use digital yuan as the payment tool for all retail scenarios,” Mu said.
“In the short term, we can start by unifying QR code standards on a technical level to achieve barcode interoperability,” he added. “In the long term, we will steadily implement the upgrade of payment tools.”
Mu’s words came after the central bank last year pledged to push for universal QR payment codes, allowing consumers to pay by scanning a unified barcode. The use of QR code payment systems, dominated by WeChat Pay and Alipay, is already widespread in China.
The PBOC has been testing the e-CNY and rolled out a pilot app in January 2022. Since the inception of the digital yuan pilots in late 2019, the PBOC has expanded its digital yuan trial to at least 26 locations in 17 provincial-level cities and regions, including Beijing, Shanghai, Shenzhen and Suzhou, state media Xinhua reported in April.
However, the e-CNY, currently being tested in pilot regions across China, remains far from achieving widespread adoption.
Enhancing wholesale efficiency
Mu said that the current interbank payment and settlement systems function well and there is no need to replace them with the CBDC system, according to the report.
“However, it is possible to achieve seamless integration by enabling comprehensive interoperability between the e-CNY and existing electronic payment tools and commercial bank deposits,” Mu said.
On a wholesale level, Mu said that the digital yuan can be used for settlement as part of the financial market infrastructure, and smart contracts can be put to use to conduct delivery versus payment and payment versus payment, “thereby enhancing wholesale payment efficiency.”