MNI BRIEF: PBOC Says Smart Contracts To Boost e-CNY Use

The People’s Bank of China will expand use of e-CNY by incorporating it into a wide range of smart contracts, helping retain its lead among central banks in the development of digital currencies, Bank officials told a forum on Thursday.

The PBOC will set incentives for banks to speed up e-CNY use and ensure “open, neutral, credible and stable” infrastructure, said PBOC Vice Governor Fan Yifei at the China Digital Finance Forum 2022.

Fan said regulation of e-CNY operations was important for the Bank’s ability to implement monetary policy and manage currency issuance. Smart contracts using e-CNY have been used in government subsidies, retail marketing and pre-paid fund management, Fan said.

The PBOC had issued around CNY83 billion of e-CNY in over 15 cities and provinces as of the end of May 2022 after starting pilot trials in Shenzhen in October 2020.

E-CNY smart contracts could reduce costs across the economy, said Mu Changchun, head of the PBOC’s digital currency institute. The expansion of e-CNY will continue to focus on retail use, laying foundations for cross-border payments, said Zhou Xiaochuan, former PBOC governor. International use of e-CNY needs coordination between countries in terms of FX policy and financial infrastructure, he said. (See MNI INTERVIEW1: China Payment Platforms To Drive Global E-CNY)