In a significant move, China’s central bank digital currency (CBDC), e-CNY, has extended its pilot program to 26 locations. This expansion has been in progress since 2019 and was officially disclosed during a recent forum held in Beijing. Zhou Xiaochuan, the former governor of China’s central bank, shed light on the evolution and future prospects of the digital currency during the event.
Zhou emphasized the paramount importance of security and the prevention of abuse in the development of e-CNY. He underscored that cryptocurrencies have inadvertently facilitated illicit activities, including money laundering, arms trading in military conflicts, and the illegal drug trade, largely attributed to the decreasing costs of technology.
The People’s Bank of China (PBOC) introduced the e-CNY pilot application in 2022 as part of its ongoing efforts to promote and test the digital currency. The two-tier system of e-CNY encourages a dynamic evolution through competition between the PBOC at the first level and commercial institutions at the second level.
Furthermore, Zhou pointed out that cross-border transactions represent a significant area of exploration for Central Bank Digital Currencies (CBDCs). This involves a complex interplay of technology, systems, and policy orientation. Notably, Hong Kong is currently in the second phase of technical testing to integrate e-CNY into its primary local payment system.
The expansion and ongoing testing of e-CNY underscore China’s continuous progress in CBDC development and its unwavering commitment to enhancing security measures in digital currency transactions.
