But there are challenges ahead. One specific question stands out: Will Chinese citizens, who already use two dominant mobile payment systems operated by these same tech firms, start paying with the digital yuan?
The People’s Bank of China (PBOC), the country’s central bank, has been operating on the digital format of its sovereign currency since 2014.
Also known as the e-CNY, it’s created to replace the cash and coins already in circulation. It is not exactly a cryptocurrency such as bitcoin. The main reason for this is because the central bank issued and maintains it. Bitcoin is a decentralized digital currency where neither a central bank nor a single administrator support it.
China’s digital yuan is a central bank digital currency (CBDC) structure. Many other central banks globally are also working on developing theirs. However, the Chinese central bank is way ahead of its global counterparts.
To date, the PBOC has been navigating the digital currency via lotteries. Tens of millions of digital yuan were passed out to citizens in a handful of cities in China.
Chinese authorities are now footing up their ambition to extend the use of e-CNY to more citizens. However, there is no established a nationwide rollout date yet.
Linghao Bao, an analyst at consultancy Trivium China, told CNBC that it feels to him like they’re now ready to push this out wider.
Tech giants on board
Last week, the PBOC established an app to permit users in 10 areas, including significant cities Shanghai and Beijing, to sign up and use the digital currency.
The two dominant payment systems in China are Tencent’s WeChat Pay and Alipay, operated by Alibaba affiliate Ant Group.