Overview

Digital renminbi (Chinese: 数字人民币; also abbreviated as digital RMB and e-CNY), or Digital Currency Electronic Payment (DCEP, Chinese: 数字货币电子支付; pinyin: Shùzì huòbì diànzǐ zhīfù), is a central bank digital currency issued by China's central bank, the People's Bank of China. It is the first digital currency to be issued by a major economy, undergoing public testing as of April 2021. The digital RMB is legal tender and has equivalent value to other forms of renminbi, also known as the Chinese yuan (CNY), such as bills and coins.

The digital yuan is designed to move instantaneously in both domestic and international transactions. It aims to be cheaper and faster than existing financial transactions. The technology enables transactions to take place between two offline devices.

The digital renminbi is seen by some commentators as a form of Chinese government surveillance and control over users and their financial transactions.

Research and development

China's central bank, the People's Bank of China (PBOC), began research on the digital currency in 2014 under the leadership of Governor Zhou Xiaochuan. In 2016, Fan Yifei, a deputy governor of the PBOC, wrote that "the conditions are ripe for digital currencies, which can reduce operating costs, increase efficiency and enable a wide range of new applications". According to Fan, the best way to take advantage of the situation is for central banks to take the lead, both in supervising private digital currencies and in developing digital legal tender of their own.

Ant backed MYbank, and Ant/Alipay participated in trials and technical cooperation with the Digital Currency Research Institute, which allowed the central bank pilot access to Alibaba's larger user base. The pilot aimed to provide an alternative retail payment rail alongside Alipay and WeChat Pay, and Ant and Tencent played roles in the trial distribution and integration with digital wallets. Most recently, there have been rollouts between operator banks and digital bank participants, including MYbank and WeBank.

In October 2019, the PBOC announced that a digital renminbi would be released after years of preparation. The version of the currency, known as DCEP (Digital Currency Electronic Payment), requires an account with a commercial bank, but may be "decoupled" from the banking system in the future, allowing tourists to gain access to the system.

2020

In April 2020, testing began in four cities around China (Shenzhen, Suzhou, Chengdu and Xiong'an) to improve the currency's functionality. Areas of testing include the currency's reliability, stability, ease of use, and regulatory concerns such as the prevention of money laundering, tax evasion and terror financing. The currency could be transferred to bank accounts or used directly with certain merchants, and could be controlled via apps on one's smartphone. As of April 2021, more than 100,000 have downloaded such apps, which were developed by banks, including six state-owned banks.

The digital currency could be spent in stores like Starbucks and McDonald's in China, as well as online shopping platforms like JD.com. Local governments, partnering with private businesses, have distributed more than 150 million RMB as an incentive to attract test users of digital RMB and to stimulate consumption.

On 12 October 2020, 50,000 lottery winners in Shenzhen's Luohu district were each given 200 digital yuan that were programmed to expire on 18 October 2020. The goal of the experiment was to boost consumer spending and test the currency and technology.

2021

As of April 2021, testing has been expanded to six additional regions: Shanghai, Hainan, Changsha, Xi'an, Qingdao and Dalian.

In June 2021, some Chinese cities expanded the use of e-CNY in public transportation. Chengdu was the first to fully integrate e-CNY payments across all buses and subway lines. This was part of a larger pilot to test the digital currency in daily transactions. Later, Beijing and Suzhou also implemented e-CNY for public transport, with Beijing enabling it on all 24 subway lines and Suzhou on its new Line 5.

At the end of 2021, there were 261 million users in the extended trial who had made US$13.8 billion of transactions It has also been rolled out for foreign attendees at the 2022 Winter Olympics in Beijing, where it has seen limited use due to entrenched digital currencies and Visa, as well as a lack of publicity.

2022

On March 31, 2022, People's Bank of China announced that the testing has been further expanded to six additional regions: Tianjin, Chongqing, Guangzhou, Fuzhou, Xiamen, and six cities in the province of Zhejiang that are hosting the 2022 Asian Games (Hangzhou, Ningbo, Wenzhou, Huzhou, Shaoxing, and Jinhua). Another news statement from PBOC shows that the cities of Beijing and Zhangjiakou are also being included on the list of testing after the 2022 Winter Olympics.

On December 16, 2022, the testing of Digital renminbi has been further expanded into five additional regions: Jinan, Fangchenggang, Nanning, Kunming, and Xishuangbanna.