ICYMI – China Launching its Central Bank Digital Currency; Japan Advances Its CBDC
TLDR – While not the first government to implement a Central Bank Digital Currency (CBDC), China is the first major economy to roll out a digital national currency; one that will, ironically enough, feature “controllable anonymity.” Not to be outdone, Japan announced that it will test a CBDC in 2021.
China has been exploring the adoption of a digital Yuan since 2014 and has had a pilot in play since last year, when the People’s Bank of China (PBoC) airdropped $1.5 million worth of the digital Yuan to Shenzhen residents. Using any of four specially developed mobile wallets, residents were able to use the digital Yuan at over three thousand retailers authorized to make use of the CBDC.
While China is not the first government to deploy a CBDC, the PBoC is poised to roll the digital Yuan out at scale, making the CBDC available to 1.4 billion residents. Despite privacy concerns over the enhanced financial surveillance, the PBoC insists that the digital yuan will feature “controllable anonymity” enhancing personal privacy via a layered approach to KYC, while adopting features to combat illicit use of the CBDC such as in money laundering.
The latest progress in the CBDC rollout has taken the form of integration within applications provided by both the Industrial and Commercial Bank of China (ICBC), one of the largest banks in the world by total assets, and the Ant Group’s mobile payment app, AliPay.
These new integrations mean that Chinese users now have three methods to participate in the CBDC test: a digital yuan card-based hardware wallet, a standalone e-CNY mobile app without log-in, and the in-app digital yuan wallet from ICBC or AliPay with log-in.
Not to be outdone, the Bank of Japan (BoJ) announced the first phase of its pilot project to study the adoption of a CBDC; the project will run through March 2022. The pilot will focus on testing the technical feasibility of issuing, distributing and redeeming a central bank digital currency (CBDC).
As noted by CoinDesk, a survey conducted by the Bank for International Settlements this year showed 86% of central banks are actively researching the potential for CBDCs, 60% are experimenting with the technology, and 14% are deploying pilot projects.
The Block’s take on digital Yuan activation option in both AliPay and ICBC apps:
- China’s digital yuan inches closer to full rollout with AliPay, ICBC activations (theblockcrypto.com)
Decrypt summary of China’s digital Yuan:
Sina News article explaining the digital Yuan’s approach to privacy and “controllable anonymity:”
CoinDesk article on the Bank of Japan’s plans for a CBDC:
The Atlantic Council’s great resource on CBDC adoption around the world: