How China Is Closing In on Its Own Digital Currency: QuickTake

While there’s no launch date yet, the People’s Bank of China is likely to be the first major central bank to issue a digital version of its currency, the yuan, seeking to keep up with -- and control of -- a rapidly digitizing economy. Trials and tests are underway in several cities, with the Covid-19 pandemic and need for social distancing adding fresh impetus. Unlike cryptocurrencies such as Bitcoin, the digital yuan won’t have any presumption of anonymity and its value will be as stable as the physical yuan, which will be sticking around too. Behind China’s rush is a desire to manage technological change on its own terms. As one PBOC official put it, currency isn’t only an economic issue, it’s also about sovereignty.

Not all the details are out, but according to patents registered by the PBOC and pilot trials, it could work something like this: Consumers and businesses would download a so-called e-wallet onto their mobile phone and fill it with money from their account at a commercial bank, similar to going to an ATM. They then use that money -- dubbed e-CNY -- like cash to make and receive payments directly with anyone else who also has an e-wallet.