A Chinese media Caixin Global recently reported that China’s digital Yuan surpassed $1 trillion, and last week, the State Council Information Office of China organized a series of press conferences aimed at discussing the nation’s commitment to high-quality development.
During these conferences, Lu Lei provided updates on the digital yuan’s advancements. He explained that the digital RMB is currently undergoing pilot testing in 17 provinces and regions, expanding its applications across various sectors such as wholesale, retail, hospitality, culture and tourism, education, and healthcare.
The digital currency has been designed to support both online and offline transactions, developing solutions that can be replicated and adopted widely. Lu Lei also noted that by the end of June, the total transactions using the digital RMB had approached 7 trillion yuan, nearly equaling $1 trillion.
Also, as of June this year, the transactional volume of China’s CBDC has surpassed that of both USDC and USDT. At the time of writing, USDC’s transactional volume is approximately $5.38 billion, while USDT’s stands at about $45.16 billion. Despite these figures, the digital yuan’s volume remains higher, showcasing its significant adoption and usage.
Leading the Way in Global Financial Innovation
Lu Lei highlighted the digital RMB’s significant impact on enhancing financial inclusivity and improving payment efficiencies, noting its contributions to increasing consumer spending, fostering environmentally friendly practices, and refining the business climate.
The deputy governor of the People’s Bank of China detailed that a decade of research and extensive pilot testing across various regions had demonstrated the initial success of the digital RMB. He described the creation of a dual-layer operational structure that incorporates central bank oversight with active participation from other financial institutions to ensure robust management and deployment of the digital currency.
Furthering these efforts, Lu explained that over six years of research and development, coupled with more than four years of pilot implementations, have validated the digital RMB’s theoretical and practical applications, aligning it more closely with the needs of the digital economy and confirming its effectiveness and reliability.
Additionally, Lu discussed China’s proactive role in a multinational digital currency initiative, working with Hong Kong’s central bank, Thailand, and the UAE. This project, orchestrated by the Bank for International Settlements, is designed to streamline cross-border payments and is currently in the development phase of a viable product. Lu affirmed the People’s Bank of China’s commitment to enhancing global payment systems, with the project already facilitating actual transactions among the participating countries, setting the stage for broader international cooperation.
Stablecoins Could Boost Yuan’s Global Reach, Says Circle CEO
While China has banned decentralized cryptocurrencies, it has been actively developing and promoting its digital yuan, a central bank digital currency (CBDC). In this environment, Circle CEO Jeremy Allaire recently admitted he sees a unique role for stablecoins, particularly a yuan-based stablecoin, in enhancing the global usage of China’s national currency. Allaire even suggested that stablecoins might be a more effective tool for international trade and commerce involving the yuan than the digital RMB itself.
China’s stringent measures against cryptocurrencies began in 2021, but its efforts to test and issue the CBDC have advanced significantly. By January 2023, there were about 13 billion digital yuan in circulation. Despite its potential to replace traditional currencies and other stablecoins like the dollar and Tether (USDT), the digital RMB is explicitly not a stablecoin.
It allows users to convert other cryptocurrencies into digital yuan through platforms like MetaMask or its proprietary conversion portal, according to the official website. This approach indicates China’s broader strategy to integrate modern financial technology while maintaining strict control over its digital financial ecosystem.
