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China's Digital Yuan is Set to Expand Into Retail Adoption: Report

Mu emphasized the need for wallet providers, payment apps like WeChat and Alipay, and commercial banks with mobile banking apps to adhere to compliance requirements and acquire relevant financial licenses to facilitate the use of digital yuan in all retail payment scenarios.

Digital Yuan's Role in Retail

China's Digital Yuan, the central bank's digital currency (CBDC), is set to take center stage in all retail payment scenarios. A high-ranking official from the People's Bank of China (PBOC) emphasized the importance of making the digital yuan available across various payment platforms, according to a local media, The Paper

Here's what's unfolding:

Digital Yuan Goes Retail: Changchun Mu, head of the Digital Currency Research Institute at the PBOC, underlined that the digital yuan should serve as the primary payment method for all retail transactions. This ambitious move aims to integrate the digital yuan into everyday payment solutions.

Barcode Interoperability: In the short term, plans involve streamlining QR code standards for barcode interoperability. China is already familiar with QR code payment systems, with dominant players like WeChat Pay and Alipay leading. This alignment of technical standards aims to enhance the digital yuan's accessibility for consumers and businesses.

Digital Yuan at the Asian Games: Mu outlined that China's determination to promote the digital yuan extends to the upcoming Asian Games, where efforts to enhance its adoption will be in full swing.

Trial Expansion: Trials for the digital yuan have expanded across 26 locations in 17 provincial-level cities and regions, including major hubs like Beijing, Shanghai, Shenzhen, and Suzhou. Despite these efforts, widespread adoption is still a work in progress.

Integration Over Replacement: Notably, Mu affirmed the efficiency of existing interbank payment and settlement systems. Instead of an immediate replacement, the focus is on seamless integration between the digital yuan, existing electronic payment tools, and commercial bank deposits.

Wholesale Opportunities: From a wholesale perspective, the digital yuan presents opportunities for settlement within the financial market infrastructure. According to Mu, Smart contracts can potentially enhance wholesale payment efficiency by facilitating delivery versus payment and payment versus payment transactions.

Beyond immediate measures, Mu outlined a long-term vision for the steady implementation of advanced payment tools associated with the digital yuan. As the PBOC continues to push the digital yuan's adoption, these strategies could significantly impact China's retail and wholesale payment landscape.

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