Consumers in China have shown little enthusiasm for their country’s central bank digital currency (CBDC).
That’s according to a former official from the People’s Bank of China, whose comments were reported Thursday (Dec. 29) by Reuters, which cited state media outlet Caixin. That official, Xie Ping, said he was disappointed with the results of China’s test of its digital yuan and said the program needed to be expanded.
“The cumulative circulation of the digital yuan in the two years of the trial has been only 100 billion yuan ($14 billion),” Xie told a conference at Tsinghua University, per Reuters. The number indicated that “usage has been low, highly inactive.”
“The results are not ideal,” Xie, a former director-general of research for the Chinese central bank. “What needs to change is the digital yuan acting only as a substitute for cash and only for consumption.”
As PYMNTS reported in October, China is far ahead of other major world economies in launching a CDBC, as its efforts stretch back nearly a decade.
However, its testing and rollout campaign has been slow, partially to give merchants more time to get ready, and to urge consumers to use it rather than more popular digital payment methods AliPay and WeChat Pay, which make up a bulk of China’s digital payment volume.
China has taken numerous steps to deal with these obstacles, including pressuring merchants to accept the digital yuan and instituting a “scan with one code” law that essentially forced AliPay and WeChat Pay to accept the CDBC and work on a system that makes the digital currency equally accessible to consumers.
The country has also conducted a series of lotteries in which it gave away millions of dollars in digital yuan in small increments to hundreds of thousands of consumers who had to download digital wallets to gain access to the funds or risk losing them within a short time.
China is not the only country struggling to get its CDBC project off the ground. The Bank of England’s digital pound project hasn’t seen much support from the U.K. parliament. The cross-party Lords Economic Affairs Committee called CBDCs “a solution in search of a problem” in a recent report.
And in India, the central bank’s wholesale digital rupee project has local bankers noting a downside to the program: Each trade using the CBDC must be settled individually, while transactions that use the existing interbank network can be taken care of in bulk.
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