Since 2022, any banks that wanted to enable access to China’s digital RMB central bank digital currency (CBDC) had to go via ten major banks. That’s all changed with a significant expansion of direct access to 22 banks. Additionally, the digital RMB has seen a leap in uptake in Hong Kong. It has 80,000 wallet signups, with the number of Hong Kong merchants accepting the digital currency growing from 300 to 5,200.
While the increase to 22 banks has been widely reported, the rationale hasn’t been. On 1 January this year the digital yuan initiative pivoted from being primarily a CBDC to a tokenized deposit solution. Some payment providers may still enable access to a CBDC format with direct holdings at the central bank, but the primary avenue is via bank deposits. In other words, the digital RMB is a liability of the commercial bank, which is why it now also offers interest.
This explains the expansion of the number of banks, which now covers most of China’s systemically important banks (see below), and we can expect that number to grow further.
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