China Makes History with World’s First e-CNY Security Purchase
• The Bank of China has become the first in the world to use the digital yuan (e-CNY) to purchase securities.
• The e-CNY transactions reached $14 billion as of October last year, and are expected to total 13.6 billion yuan (US$2 billion) by the end of December 2022.
• China is one of the first countries to establish a CBDC, collaborating with other countries and the Bank for International Settlements, an organization of 61 central banks from around the world.
The Bank of China has made history as the first in the world to use the digital yuan (e-CNY) to purchase securities. The country put the e-CNY into circulation last week, making it more advanced than most other countries in the development of the Central Bank Digital Currency (CBDCs).
The e-CNY transactions have been gaining traction since October last year, with the amount reaching $14 billion by the end of that month. According to Wang Pengbo, senior financial analyst Botong Analysys, the government should focus on introducing new users to the app and improving user experience to ensure wider adoption. This could further increase the amount of e-CNY in circulation, and it is expected to total 13.6 billion yuan (US$2 billion) by the end of December 2022.
China was one of the first countries to establish a CBDC, collaborating with other countries and the Bank for International Settlements, an organization of 61 central banks from around the world. Its pilot scheme included up to 26 major cities and 5.6 million merchants, such as Beijing, Shanghai and Shenzhen.
The central bank has also increased its cash and reserves held by the central bank by 15.3% in December 2022. This is the fastest rate in 11 months, with the digital yuan accounting for only 0.13% of the total. Countries around the world are pushing ahead with CBDC development, and most central banks are aiming to issue a CBDC within the next ten years.
Despite the slow adoption of the e-CNY in China, the success of the digital yuan in purchasing securities is a major milestone for the country. It shows that the CBDCs are becoming more widely accepted and could potentially revolutionize the way we use money. With the increased adoption of e-CNY, the world is likely to see more countries introducing their own digital currencies and using them in various sectors.