Chinese Banks Open The Doors To Digital Wallets

Citizens of Shanghai and Beijing can now apply to one of a collection of Chinese banks for a digital yuan wallet, Decrypt reported Friday (March 26).

The six banks are the Bank of China, Bank of Communications, Postal Savings Bank of China, Industrial and Commercial Bank of China, China Construction Bank and Agricultural Bank of China, all of them state-owned banks.

The Chinese government has been pushing for a digital yuan, with the country at “the forefront of the world’s pivot to digital currencies,” Decrypt said.

As of November 2020, more than 2 billion digital yuan had been spent, which was at the time the equivalent of roughly $300 million. Chinese banks began their journey toward digital currency in 2014, when Xiaochuan Zhou, then the head of the People’s Bank of China, launched the Digital Currency Research Institute. Last year, China issued more than 10 million in digital yuan to people in Shenzhen.

Decrypt argues that these efforts are “in stark contrast” to what’s happening in the United States, where officials are interested in, but cautious about, digital currency.

The news outlet quotes the chairman of the Federal Reserve as saying, “We have a highly banked population so that many — although not all — already have access to the electronic payments system,” adding, “We do think it’s more important to get it right than to be the first.”

The U.S. is “watching China’s push towards a digital currency with interest, if not alarm,” Decrypt said. Last summer, the Senate held a hearing examining how a digital dollar could keep the U.S. dollar in place as the global reserve currency.

That isn’t to say China is ready to switch to the digital yuan entirely. As reported earlier this week, the country’s central bank has said the digital yuan will not displace the payment services offered by China’s big FinTech companies such as Alipay from Ant’s Group of Tencent Holding’s WeChat Pay.