CHINA’S digital yuan trial has reached 34.5 billion yuan (US$5.3 billion) in transaction value as the central bank continues to outpace global peers in developing a virtual currency.

Across China, more than 20.8 million individuals have opened a virtual wallet that stores the digital currency and have made more than 70.7 million transactions in total, the People’s Bank of China said in a white paper published Friday. The central bank said it will continue to test and develop the system, but won’t set a timetable for its official rollout.

So far, the central bank has basically completed the research and development of the design and function of the digital currency, the white paper said. Going forward, the central bank will “further expand the scope of the trials and the scenarios they cover,” it said.

China’s push to develop a digital yuan has accelerated the move globally, prompting more central banks to look into developing virtual currencies.

China started the test of its digital currency in late 2019 and has since expanded the trial to 11 cities and provinces including Shenzhen and Shanghai, the white paper said. The trials have increased the public’s understanding of how it works, it said.

The digital yuan is a retail central bank digital currency (CBDC) that will be circulated among the public, as opposed to a wholesale CBDC issued to commercial banks and other institutions for large-volume transactions, the white paper said.

Technically, the digital yuan can be used for cross-border transactions, but it will mainly be used for domestic retail purposes for now, according to the white paper.

The central bank will explore cross-border trials based on overseas needs and will respect other countries’ monetary sovereignty in the process, it said.

In April, Zhou Xiaochuan, China’s former central bank governor, said China should not rush to use the digital yuan for cross-border payments due to regulatory obstacles and foreign concerns about it’s global impact.

The central bank will deepen its research on the impact of a digital yuan on monetary policy, the financial system and financial stability, the bank said.

The central bank warned that cryptocurrencies are mostly used for speculation, which threatens financial security, and such currencies could be used for money laundering and other illegal economic activities.

(SD-Agencies)