In such a momentous year for crypto, it’s easy to forget what last month was like, let alone last year. But cast your mind back to 2021, when one of the most compelling stories was the astonishing – perhaps intimidating – progress of China’s digital currency and crypto alternative, the e-CNY.
No other major economic power had started as early (2014) or pushed the design of a central bank digital currency (CBDC) as far. Think tanks and finance experts, even current and former U.S. government officials, warned that if China got too far ahead of the rest of the world, it would control the interoperability, privacy, security and other facets of CBDC design.
Now think back to the runup to the Beijing Olympics. Major economies suspected China would use this massive global event to debut its e-CNY to attendees from all over the world, and felt tremendous pressure to prevent falling behind in the CBDC race.
Read more: Presenting CoinDesk's Most Influential 2022
According to the Atlantic Council, 105 countries, representing over 95% of global GDP, are exploring a CBDC. For that significant representation, we have China to thank.
“In the same way [China has] done with 5G technology, they can be a major exporter of CBDC infrastructure,” former Commodity Futures Trading Commission Chair J. Christopher Giancarlo said on CoinDesk TV’s “First Mover'' in late February. “It's going to be CBDC-in-a-box provided to you by the People's Bank of China.”
More ominously, he described rogue nations using non-Western CBDC to evade sanctions like the ones the U.S. and European Union imposed on Russia after its invasion of Ukraine, just a week after the close of the Beijing Olympics.
“CBDCs are absolutely being seen as a form of statecraft by countries that have been subjected to Western sanctions in the past and wish to have a way to avoid that in the future,” Giancarlo said.
Perhaps as a result of the anti-climactic – in terms of e-CNY progress – pandemic-stunted Olympics, media coverage of e-CNY is no longer coming at a breakneck pace. But China continues to push the envelope. Trials of e-CNY have been taking place for the past two years with the pace quickening in 2022 as the trial extended to four major provinces, including Guangdong, the most populous. PBOC data also shows that e-CNY reached the milestone of 100 billion yuan (US$13.9 billion) worth of transactions by this October. At the start of the year, the Chinese had opened 261 million e-CNY wallets, according to the latest PBOC data.
In such an atmosphere, determining who to credit for China’s CBDC development can be difficult because of the nation’s famously opaque government. However, there is Mu Changchun, who has worked as the director general of the Digital Currency Institute of the People’s Bank of China (PBOC) since 2019 and has become, at least in interviews, the face of China’s CBDC. Established in 2016, the institute is dedicated in part to launching the e-CNY.
Mu has the job title, but by all accounts he serves at the pleasure of President Xi Jingping. As Xi consolidated his power in the latter half of 2022, two other key players in the PBOC with ties to the e-CNY project appear to have been cast aside.
Fan Yifei, deputy governor of the PBOC who often spoke publicly about e-CNY progress over the last couple years, was abruptly held for questioning in a corruption probe in early November, and his name no longer appears as an executive of the bank. Yi Gang, governor of the PBOC, is likely to step down early next year; his name was dropped from the list of full or alternate members of the Central Committee, the country's most senior officials and political elites.
Right now, Mu seems to be the only megaphone delivering news of the progress of CBDC in China. "I have a rough idea that (there are) several, or a couple of million RMB (renminbi) of payments every day…," Mu told a webinar audience of the Atlantic Council that coincided with the Beijing Winter Olympics. He has spoken about e-CNY in various global meetings, including a closed-door event in July by the International Monetary Fund.
The big question is whether Fan's departure and Yi's expected exit will affect the development of e-CNY. It appears for now, however, that China will continue to push its lead in the global CBDC race, and central banks the world over will try not to fall too behind.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is an award-winning media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. In November 2023, CoinDesk was acquired by Bullish group, owner of Bullish, a regulated, institutional digital assets exchange. Bullish group is majority owned by Block.one; both groups have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary, and an editorial committee, chaired by a former editor-in-chief of The Wall Street Journal, is being formed to support journalistic integrity.