![]() What, then, is the e-CNY, and why is it notable? The e-CNY is a digital version of China’s fiat currency, the renminbi (RMB, or CNY in the ISO standard). While PBOC is experimenting with several international pilots involving the e-CNY, these small-scale applications will not solve the larger problem of China’s capital controls. As Eli MacKinnon writes, a 2021 PBOC deal with the international banking service SWIFT has no specific tie to e-CNY so far. China maintains robust capital controls, which are responsible for keeping renminbi in the country. ![]() However, the overall landscape of capital flows in China makes e-CNY an unlikely tool for RMB internationalization. International observers have speculated that the e-CNY could be a gamble to challenge supremacy of the U.S. The PBOC’s efforts to publicize the e-CNY have a notable international bent, including encouraging athletes and foreign visitors to adopt the e-CNY wallet at the 2022 Olympics. However, given China’s complete ban on cryptocurrency trading and mining, that possibility remains remote.įinally, the e-CNY is not part of a concerted strategy to internationalize the renminbi-at least not yet. ![]() Judging by PBOC’s patent trail, it’s possible the e-CNY might one day play a role in a Chinese cryptocurrency industry, perhaps serving as the exclusive stablecoin for Chinese cryptocurrencies. As Eli MacKinnon writes in our Lexicon entry on “controllable anonymity,” the e-CNY's designers are building systems that promise to shield user identities in some contexts while still providing law enforcement and security agencies access when they demand it. That does not mean the e-CNY lacks any new characteristics. At this technical level, the e-CNY is not fundamentally different from other online digital payment options in China such as AliPay and WeChat. Unlike Bitcoin and other cryptocurrencies, e-CNY does not operate through a blockchain-based decentralized ledger rather, it is a centralized operation, issued and supervised by the PBOC. As Eli MacKinnon and Mikk Raud explain, the e-CNY is separate and distinct from the Blockchain-based Service Network (区块链服务网络), China’s ambitious project to create a state-backed distributed ledger infrastructure-even if the two projects might work together in the future. Second, the e-CNY is not a cryptocurrency. For the time being, the digital yuan has nowhere near the scale or functionality to have widespread domestic, much less international, appeal. Moreover, its ability to clear transactions-a key test for a payment service-is considerably lower than China's private sector digital payment incumbents, AliPay and WeChat Pay. However, the service is still limited to 10 cities as part of its initial launch pilot, and its usage since the Olympics has been extremely modest. A pilot version of the e-CNY wallet debuted in app stores ahead of the 2022 Winter Olympics in Beijing-an early public roll-out for the digital coin-and briefly topped the charts for the most downloaded free app on Apple's China App Store. ![]() However, despite the hype, the e-CNY-what it is, what makes it unique, why it’s important-remains little understood.Īt the moment, it can be helpful to start with what it is not:įor one, the e-CNY is not yet fully functional. It’s clear that the Chinese Communist Party has big plans for the e-CNY, having emphasized the role of a digital currency in its long-term plan for the economy through 2035. Announced by the People’s Bank of China (PBOC) in 2017, the e-CNY is China’s attempt to develop a digital fiat currency, widely referred to as a central bank digital currency (CBDC). What is the e-CNY? China’s digital currency goes by many names: the digital yuan, the e-Renminbi (e-RMB), the Digital Currency/Electronic Payment (DC/EP) project, and most commonly today, e-CNY. lawmakers for “making trouble” out of China’s digital currency. China’s Ministry of Foreign Affairs hit back, chiding the U.S. ![]() In a recent letter to the Biden administration, Senator Pat Toomey, R-Pa., and several other senators expressed concern that the United States was ceding a “first mover advantage” to China. In December, the United Kingdom’s spy chief sounded the alarm over the digital currency, calling it a potential vector for Chinese global surveillance. Over the past year, the e-CNY (数字人民币, shùzì rénmínbì) has become a source of western concern about China's growing digital influence in financial technologies. Student editors enrolled in our first DigiChina Newsroom course at Stanford University in Spring 2021 initiated the effort, and Laskai and Associate Editor Johanna Costigan brought it to publication. This article by Lorand Laskai introduces a growing body of DigiChina work on China's digital currency efforts and their relationship with recent blockchain initiatives. ![]()
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