In circulation for two years now, the digital yuan is currently a failure in China.
According to a former official of the People’s Bank of China, the e-yuan has not yet found its audience in the Middle Kingdom.
A cumulative circulation of barely 14 billion dollars
It was during a conference organized in collaboration with Tsinghua University on digital finance that Xie Ping, a former senior official of the Chinese Central Bank, spoke.
In his remarks reported by the media Caixin and which the Reuters agency echoes, the digital yuan, tested in several cities and provinces of the country, is for the moment shunned by the population. The figures presented show, according to him, that usage has been low and very inefficient “.
” The cumulative circulation of the digital yuan over the two years of the trial was only 100 billion yuan ($14 billion) “, he added. Not enough to weigh in a country whose GDP last year amounted to 17,730 billion dollars.
The land is already occupied by cash and bank cards
It must be said that the horizon of means of payment seems blocked for the moment for this transaction tool. As Xie Ping explains, “ cash, bank cards and third-party payment mechanisms in China [ndrl : comme Alipay] have formed a payment market structure that has met everyday consumer needs “.
Under these conditions, the e-yuan appears as a rather superfluous object for consumers, the fruit of an above-ground political will whose benefits are quite meager. The possibilities offered by the digital yuan are indeed quite small.
It thus offers few services compared to Alipay, which had also burst into the middle of the duopoly formed by cash and scriptural money, and had made a place for itself by allowing the user to access insurance, investment or consumer loan services.
Replacing Bitcoin in Europe and China
European authorities should analyze this difficult start in detail. The European Union also wants to market its own digital euro in the years to come. It is motivated in this sense, as is Beijing, by the rise of cryptocurrencies, which it sees as an illegitimate rival to its monopoly of monetary issuance. In particular, stablecoins such as USDT or UDSC are in its sights.
And as we can read in one of the documents produced by the authorities in Brussels, it will first of all be ” preserve the role of public money as the monetary anchor of the payment system “.
But if the desire to keep in hand a sovereign skill is understandable, the fact remains that the effectiveness of the tool will be correlated to the extent of its adoption. However, as we see with the Chinese example, government digital currency offers relatively few incentives and remains relegated to the background of the national portfolio.
A currency without the benefits of crypto or cash
When we look at the detail, we quickly understand the reaction of the public. Digital currency, as “state cryptocurrency”, is built on the blockchain. As with all such currencies (with the exception of projects such as Monero), it is technically possible to trace all transactions made by a unit, and therefore expose the owner. It is therefore the opposite of cash, and it even remains far from scriptural currencies, banks being legally bound to secrecy, except for the express and limited request of justice.
While the issue of privacy is important, digital currency is also less convenient than traditional means of payment. It cannot thus be accumulated to give rise through interest to remuneration. Worse, it can also, depending on the will of the issuing institution, be programmed for specific uses (as in the case of social assistance), or even be endowed with an expiration date after which the units not consumed by transactions would become unusable. Very solid pitfalls that the European Union will have to take into account.
Sources: Reuters, The Great Continent
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