The trial hotspot service that allows Chinese citizens to trade their fiat currency for digital yuan has seen a paltry take-up rate, according to industry insider reports. The service, which was launched late last month in the city of Shanghai, has only seen two customers in the first three days of operation, according to a source who wishes to remain anonymous. The digital yuan is pegged at a rate of 1-to-1 with the Chinese yuan, and the source claims that the low rate of take-up is likely due to the fact that the digital yuan cannot be exchanged back into fiat currency.
China is currently testing the issuance of digital yuan, but this currency does not seem to be meeting the government’s expectations. A recent report cited a series of interviews with hotspot residents that showed little enthusiasm among participants.
Reported data protection issues
According to Bloomberg, residents of Shenzhen, China’s equivalent of Silicon Valley, have shown little interest in the central bank’s digital currency (CBDC), citing concerns over privacy and surveillance as the main reasons.
The People’s Bank of China (PBoC), the country’s central bank, is accelerating pilot projects to prepare the digital yuan for the 2022 Winter Olympics. People are reluctant to give up existing mobile payment solutions, showing their attachment to WeChat and Alipay. One participant in the pilot sample of 500,000 told Bloomberg that she was not at all happy to be included in the study. Another expressed concern that the pilot project would allow the authorities to trace any payment and described the currency as somewhat intimidating.
Will the digital RMB accept an acquisition that is only aimed at the domestic market?
Li Bo, head of the PBoC, said the digital yuan is not intended to replace the US dollar. Instead, the government is seeking widespread use for domestic purposes.
Bo’s statements diverge from the generally optimistic tone about the currency’s global potential. However, it is now clear that the government has serious problems attracting domestic users as well. It may well prove more difficult than expected to detach them from the entrenched financial infrastructure of Tencent and Antgroup, regardless of international acceptance of the currency.
What do you think of Bloomberg’s report on the digital yuan? Let us know your comments in the section below.
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