China's digital currency records huge demand in pilot project

China's digital currency, or e-CNY, was the most issued and actively transacted token in the $22 million pilot that used central bank digital currencies to settle cross-border trades, a Bank of International Settlement report showed, according to a Reuters' story on Oct 27.

The six-week test, which ended late last month, is part of m-Bridge — a project that pilots cross-border payments in digital currencies issued by central banks of China, Thailand, the United Arab Emirates and counterpart bodies in Hong Kong SAR.

China is at the fore of a global competition to develop CBDCs, and is ramping up domestic pilot schemes, mainly for retail payments, said Reuters.

A total of 11.8 million yuan ($1.64 million) worth of e-CNY were issued in the testing between Aug 15 and Sept 23, and the Chinese currency was used in a total of 72 payment and foreign exchange transactions, far greater than the other three currencies each.

China's top five state banks, including Bank of China and China Construction Bank, participated in the pilot, settling the CBDCs on behalf of their corporate clients.

The relatively high number of e-CNY issuances "could reflect greater demand for yuan-denominated transactions", given the country's high share of regional trade, the BIS Innovation Hub Hong Kong Centre said in the report.