China's central bank digital currency (CBDC), known as e-CNY, has expanded its pilot to 26 locations, a move that has been under way since 2019. This was revealed during a forum in Beijing, where the former governor of China's central bank, Zhou Xiaochuan, detailed the evolution and potential future direction of the digital currency.
Zhou underscored the importance of security and abuse prevention in the development of e-CNY. He highlighted that cryptocurrencies have inadvertently facilitated illicit activities such as money laundering, arms trading in military conflicts, and fentanyl-related drug trades due to decreasing technology costs.
In 2022, the People's Bank of China (PBOC) introduced an e-CNY pilot application as part of its ongoing efforts to promote and test the digital currency. The two-tier system of e-CNY encourages dynamic evolution through competition between the PBOC at the first level and commercial institutions at the second level.
The former governor also noted that cross-border transactions are a significant area of exploration for CBDCs. This involves a complex interplay of technology, systems, and policy orientation. In this regard, Hong Kong is currently in the second phase of technical testing to integrate e-CNY into its main local payment system.
This expansion and testing signify China's steady progress in CBDC development and its intent to enhance security measures in digital currency transactions.
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