Table of contents:
– History of the digital yuan
– How is the digital yuan used in China?
– China is primed for digital yuan by Alipay
– The digital yuan abroad
– Is the digital yuan a threat to the US dollar?
– BRICS and de-dollarization
– The digital yuan, SWIFT censorship and sanctions
– The digital yuan and mBridge
– American politicians attempt to ban the digital yuan
– Is the digital yuan a tool for surveillance?
– The digital yuan and crypto
China’s central bank digital currency is known as the digital yuan, e-CNY or e-RMB and despite the hype, it represents a minuscule portion of the money supply and has only been used at any scale a few times internationally.
But politicians, bankers, activists and businesses worldwide pay outsized attention to it. Opinions about the digital yuan vary, but they are almost always extreme. It’s seen by some as a world leading advance, and by others as an instrument of oppression and a way to subvert US sanctions. As with everything else in crypto, it’s probably too early to tell. But the potential is massive… for good or ill.
History of the digital yuan
The digital yuan originated with a project launched by the People’s Bank of China (PBOC) in 2014. At the time, central bank digital currencies or CBDCs were a new idea discussed only in specialized circles. Interest in the topic soon took off however, and the PBOC Digital Currency Research Institute (DCRI) was formed in 2016.
In late 2019, a digital yuan pilot project was launched in four areas — the cities of Shenzhen, Suzhou and Chengdu, and the Xiong’an New Area. While still in the pilot phase, the digital yuan has expanded to 21 areas in China and was used at the 2022 Winter Olympics, exposing foreigners to it for the first time. Some United States politicians have advised against using it, talking about “digital authoritarianism.”
A PBOC report claimed that, as of January 2022, there were more than 260 million digital yuan wallets, and 87…
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