China's digital yuan - its trial-stage central bank digital currency (CBDC) - should be available in all retail payment scenarios, a Chinese central bank official said on Sunday.
Changchun Mu, head of the digital currency research institute of 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 applications and other payment applications, including electronic CNY operators — must be wary of compliance and obtain the appropriate financial licenses, local media outlet The Paper reported.
“The first step in the upgrade process is to use the digital yuan as a payment instrument for all retail scenarios,” Mu said.
“In the short term, we can start by unifying QR code standards at a technical level to achieve barcode interoperability,” he added. “In the long term, we will systematically update payment instruments.”
Mu's remarks come after the central bank last year pledged to promote universal payment QR codes, allowing consumers to pay by scanning a single barcode. The use of QR code payment systems, dominated by WeChat Pay and Alipay, is already widespread in China.
The PBOC tested the electronic yuan and launched a pilot application in January 2022. Since launching the digital yuan pilot in late 2019, the PBOC has expanded the 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-yuan, which is currently being tested in pilot regions across China, is still far from widespread adoption.
Improving the efficiency of wholesale trade
Mu said current interbank payment and settlement systems are functioning well and there is no need to replace them with a CBDC system, the report said.
“However, seamless integration can be achieved by ensuring full compatibility between e-CNY and existing electronic payment and deposit instruments of commercial banks,” Mu said.
At the wholesale level, Mu said the digital yuan can be used for settlements as part of the financial market infrastructure, and smart contracts can be used to handle deliveries and payments and payments against payments, “thereby improving the efficiency of wholesale payments.”