A Chinese city, Changsha has reached a 60 million milestone for transaction count using China’s central bank digital currency (CBDC). The digital Yuan is a long term project that has been ongoing for years.
Something that started like an experiment has received a lot of acceptance from Chinese citizens who’re willing to use the CBDC for buying and selling. Changsha, a city in Central China located in Hunan Province was added as part of a pilot study in 2021.
Being one of the most populous cities in the country with over 10 million residents, it is hardly surprising that they could reach the milestone. It also reportedly has more than 420,000 merchants who currently accept payments in the Chinese CBDC. As at February this year, there were only 300,000 merchants accepting the digital currency, but the number has increased by almost 50% to 420,000 within two months.
This shows a rapid increase in the adoption rate in the city. Authorities report that there are 22 million wallets currently for physical businesses only. In addition, there are 800,000 public wallets for governments and firms operating in the city. In total, these wallets have processed about 62 million transactions since the pilot began, an equivalent of $1.4 billion.
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A 90% Increase in Popularity
Changsa has shown a significant interest in the use of the digital Yuan, but it is only a reflection of what is happening in the entire country. According to reports from the People’s Bank of China (PB0C), there was a 90% increase in popularity of the CBDC last year.
The central bank has also commenced cross-border pilot using Hong Kong and Macau. Beijing will use this opportunity to test the CBDC in international markets, thus taking the coverage even further. Both Hong Kong and Macau maintain separate economic systems but are still being recruited for the international pilot.
If the digital Yuan gets as much popularity on an international scale as it is getting locally, the country may institutionalize the general use of the CBDC earlier that initially thought.
CBDC Popularity in Other Countries
China isn’t the only country that has developed a CBDC. Nigeria launched its CBDC in 2021 without a pilot and although the country has put several incentives in place to encourage adoption, the popularity is nowhere close to what the digital Yuan is enjoying.
As at February this year, it was reported that only 0.5% of Nigerians were using the eNaira. It isn’t clear if it is because there was no pilot, but the citizens clearly aren’t as interested as the Chinese. Indeed, CBDCs are generally frowned upon as instruments of control, but countries like China seem to appreciate its use even thought they can get locked out of their wallets or prevented from spending as they please.