PBOC expands e-RMB use but challenges remain


An E-CNY (pilot version) app is displayed on a mobile phone in Ganzi city, Sichuan province, China, January 4, 2022. The People’s Bank of China launched the app to expand the use of the digital yuan. (Photo credit should read /Costfoto/Future Publishing via Getty Images)

Jianfeng Wang | Cost Photo | Future Publishing | Getty Images


With the addition of Chinese tech giants such as Alibaba and Tencent, China is ramping up efforts to roll out a digital yuan to a wider audience.

But there are challenges ahead, and one in particular stands out: Will Chinese citizens who already use the two main mobile payment systems run by these tech companies start paying with the digital yuan?


The People’s Bank of China (PBOC), the country’s central bank, Has been working on the digital form of its sovereign currency since 2014.

Also known as e-RMB, it is designed to replace cash and coins already in circulation. It is not a cryptocurrency like Bitcoin, in part because it is controlled and issued by a central bank. Bitcoin is a decentralized digital currency that is not backed by any central bank or single administrator.

Although no date has been set for the nationwide rollout of the electronic yuan, Chinese authorities are now ramping up their ambitions to expand the use of the electronic yuan to more citizens.


“In my opinion, they are now ready to roll it out to a wider range,” Linghao Bao, an analyst at consulting firm Trivium China, told CNBC.

Tech giants on board

Last week, the The People’s Bank of China has launched an app Users in 10 major cities including Shanghai and Beijing are allowed to register and use digital currency.

The two major payment systems in China are Tencent’s WeChat Pay and Alipay, operated by Alibaba’s Ant Group.


Perhaps the most significant boost came on Thursday when Tencent announced its WeChat messaging app will support digital yuan. WeChat Has more than 1 billion users And it is an indispensable part of daily life in China.

Alipay is also a partner of the digital yuan.

The biggest question we face is whether consumers will use it. To me, there is no strong incentive for consumers to switch…

Ling Haobao

Trivium China Analyst

A potential challenge for the PBOC is getting people to download their new digital yuan app and switch from WeChat and Alipay. Therefore, integration with WeChat is key and provides e-CNY with a potentially large user base.

On Friday, e-commerce giant JD.com said it would start facilitating third-party merchants selling on its platform to begin accepting the electronic yuan.

JD.com is an early partner of the digital yuan, previously Accept payments several times. Now it is looking to expand further.

Will people continue to use the digital yuan?

While the technical makeup and other factors behind digital currencies are still unknown, one of the more immediate questions is whether people will use e-renminbi on a regular basis, even as central banks try to drive wider use.

Using WeChat or Alipay, for example, users simply link their bank accounts to the app. But to use the digital yuan, users need to sign up for a separate app and link it to their WeChat or Alipay, or use the digital yuan app.

“The biggest question we have is whether consumers will use it. For me, there is no strong incentive for consumers to switch [from their current systems]’ Bao said.

“I don’t see any strong motivation because there is still friction in using the digital yuan,” he said. “You have to download the app, sign up, and top up your wallet. I’m not sure consumers are willing to go through these extra steps.”

While the People’s Bank of China has used the digital yuan lottery to effectively distribute free funds and engage users, Bao questioned what would entice citizens to continue using the digital yuan after they spent the money.

“How do you plan to keep people using the digital yuan?” he asked.

Beijing Olympics

China’s central bank has previously said it intends to provide digital yuan to tourists at the Beijing Winter Olympics.

Beijing 2022 Olympic venues will be able to use the e-CNY app there. But Paul Triolo, head of the geotech practice at risk consultancy Eurasia Group, said overall transaction volumes are unlikely to match Alipay and WeChat Pay.

“In the foreseeable future, even with a pick-up in the Winter Olympics, the transaction turnover of the PBOC’s digital yuan may be very small compared to popular payment platforms WeChat Pay and Alipay,” Triolo said. The Chinese currency is also known as the Renminbi, or Renminbi.

“However, over time, the digital yuan may see more use in some niche areas, such as paying certain types of government-related bills, or for uses such as transportation, especially if the central bank offers incentives such as red envelopes and other incentives.”

Meanwhile, China’s so-called “zero-coronavirus” approach has led to stringent measures to try to eradicate the virus in China — meaning few foreign tourists will be attending the Winter Olympics in Beijing.

“While the Olympics were initially seen by Chinese authorities as an opportunity to demonstrate the currency’s potential use in an international setting, it is likely that few non-Chinese citizens will use a digital yuan wallet at the Olympics,” added Triolo.

The Olympics were supposed to be the first opportunity to really see how the digital yuan could work for Chinese and overseas tourists, but that opportunity has disappeared.

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