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However, he referred to smart contract ‘disasters’ experienced during early experiments but put that down to a lack of maturity. Hence he suggested the central bank start with simple smart contracts and gradually expand on the condition they’re fully secure.Īnother design feature seen as mutually exclusive is the choice of an account-based digital currency versus token-based. But in Qian’s view, it doesn’t need to be an all-or-nothing relationship. China started with an account-based CBDC as a pragmatic choice given the level of immaturity of the technology. “We look forward to controlling the key to cryptocurrency rather than taking a detour,” he said.Īs has been previously noted by the central bank’s former governor, China views its eCNY as a synthetic CBDC.

The currency itself is a liability of the state-owned bank that issues it, not the central bank. However, it is backed 100% by central bank deposits. Separately, yesterday Norwegian firm IDEX Biometrics announced it had entered into an agreement with Chutian Dragon for the creation of fingerprint-enabled cards to support the DC/EP.Qian believes an area that needs more research is around privacy or the balance between digital identities, privacy issues, compliance, and social governance. Sub wallets are intended to ringfence access to personal data to reduce the amount of personal data that e-commerce outlets can glean from payments. These are food delivery service ele.me, Hema Fresh and the Tmall Supermarket.

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Meanwhile, both the Alipay and the WeChat Pay wallets support offline payments for the digital currency.Īlipay is an associate of Alibaba, and three of Alibaba’s food-related apps are now available as sub wallets within the digital RMB app. These privacy issues are the biggest threat to the adoption of CBDCs, not just in China but worldwide. However, to transfer money to another person requires identification, which means if physical cash disappears, every person-to-person payment will be logged. In theory, retail transactions are at least partially traceable because the retailer has a log of the transactions. We’re guessing this is to prevent its use for nefarious purposes. Within Alipay, the anonymous version can only be used for retail transactions and cannot be used for P2P transfers. The digital currency has various types of wallets depending on the level of identity verification. Instead, a bank account has to be directly enabled for the digital yuan.

Hence these are the first non state-owned wallets to go live.Īccording to a report by China Business News, to add the digital currency, it’s not possible to use the existing bank account link with Alipay. Ant-owned Alipay and sister company MyBank are now live, and Tencent associate WeBank appears as coming soon. To date, the six state-owned banks were the only ones to provide the wallets.

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In April, we reported that China had significantly expanded the number of users and pilot locations for the digital currency or DC/EP from four to ten cities plus the Winter Olympics locations.

Although the e-CNY functionality is not available to all, it is enabled for a significant minority of Alipay users while the digital currency is still in its pilot phase.ĭespite there being an anonymous version of the CBDC wallet, it appears it will be a poor substitute as a replacement for digital cash because of its limited functionality, as explained later.

Alipay is the largest digital payments wallet with more than a billion users. Yesterday several Chinese news outlets, including those controlled by the state, said that some can now use the Chinese central bank digital currency ( CBDC), the digital yuan, within the Alipay app.

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