China Behind Bahamas, Cambodia on CBDC Maturity – PwC Index

The first edition of the PwC Global Central Bank Digital Currency (CBDC) Index has shown that The Bahamas and Cambodia are the two countries leading China in terms of their central banks’ level of maturity in deploying their own digital currency.

Designed to monitor the ongoing transformation triggered by CBDCs globally, the PwC Index seeks to provide a synthetic index that captures central banks’ progress, their stance on CBDC development and public interest in two distinct use cases – retail and wholesale CBDC. 

Classed under a retail CBDC initiative though adopts a hybrid approach for its technical design, in which CBDCs can be directly held by citizens and corporates, China is scored 75 on the Index where it falls behind the two smaller countries of The Bahamas (92) and Cambodia (83) whose respective projects – the Sand Dollar and Bakong – are now live. 

Nonetheless, the Index ranking does not change China being recognized as the first major economy at the forefront of issuing a CBDC. The PwC puts China’s CBDC project, the Digital Currency/Electronic Payment (DC/EP), to have “already reached an advanced level of trialling, with more than 2 billion yuan (~$300m) in transactions” in Mainland China even as it is “reportedly preparing for broader usage at the Beijing 2022 Winter Olympics.” 

Hong Kong SAR and Thailand are ranked top in the interbank or wholesale CBDC category, in which CBDCs are restricted to financial institutions, for their central banks’ initiation of Project Inthanon-LionRock in 2019. It should be recalled that the two authorities have been seeking to go from bilateral cross-border use cases to serving multiple jurisdictions and multiple currencies as disclosed early 2021 with the UAE and China drafted into the initiative.

PwC notes that global public interest suggests potential collaborative interest from private sectors and support for future project advancement even as it expects CBDCs to contribute to the modernisation of the international monetary landscape. 

At the fourth China Digital Summit earlier this week where major Chinese banks continue their push for more merchants and individuals to use digital wallets to trade in digital yuan directly, a key highlight is the revealing of a machine prototype which can enable visitors to China to convert 16 foreign currencies into the digital yuan.

Yicai reports that future passport holders would only need to put foreign currency into the machine which automatically issues a digital yuan card that displays transaction amounts and available balances. The card, which will be officially put into use for the first time during next year’s Winter Olympics, can be spent on terminals that accept digital yuan payments as well as accredited shopping malls, supermarkets and more. 

Ahead of the global sporting event, the DC/EP is set to be put to use again as another round of red envelopes with a certain amount of digital yuan is expected to be issued to Shanghai residents in May (and June) as the second iteration of the ‘Five Five Shopping Festival’ kicks off. The festival, launched on 5 May 2020 for e-commerce giants to offer subsidies and vouchers to encourage consumerism, is likely to follow last year’s record as the event raked in US$13 bln from offline sales and US$39.3 bln online or more.