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The former Chinese central bank governor says the use of the digital yuan has been low

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A former official at the People’s Bank of China (PBOC), the country’s central bank, expressed disappointment that China’s digital yuan sees little benefit.

Xie Ping, a former PBOC research director and current professor of finance at Tsinghua University, made critical public comments about China’s central bank digital currency (CBDC) at a recent university conference, according to Caixin on Dec. 28. Transfer.

Xie pointed out that only cumulative digital yuan transactions exceeded $14 billion (100 billion yuan) in October, two years after launch. “The results are not perfect,” he said, adding, “Usage has been low and not very active.”

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Despite the government rapidly expanding experiments and new wallet features to try to entice users, a report by PBOC in January stated that only 261 million users had created a CNY e-wallet.

This compares to about 903.6 million people using mobile payments in China, according to the China UnionPay 2021 report.

The former central banker said the use case for the Chinese electronic yuan “needs to change” from its current use as a cash alternative and open it up to other uses such as the ability to pay for financial products or connect to more payment platforms to boost adoption.

Compare the digital yuan to other third-party payment systems in the country such as WeChat Pay, Alipay and QQ Wallet, which allow investments, lending or loans. He said that they have “formed a payment market structure that meets the needs of daily consumption.”

Some third-party financial apps are compatible with e-CNY but see little use, as Xie said “people are used” to using the original service and change is “difficult”.

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Such criticism of Chinese government initiatives is rare from former officials and suggests that the country may seriously struggle to gain traction for its own CBDC initiative.

Related: More than 1,400 Chinese companies are involved in the blockchain industry, the national white papers appear

The government rapidly expanded e-CNY routes as recently as December to four new cities. It was Previously expanded in September To Guangdong Province, the most populous, and three more.

New features have been added to the e-CNY wallet app in a bid to catch users in time for the Chinese New Year which has added functionality for sending Digital versions of traditional red packets or red envelopes (hongbao) containing money – a common custom during festivities.