China adds 12 banks to digital yuan system, expanding e-CNY’s economic presence

China is set to include 12 more commercial banks under the umbrella of its central bank-backed digital currency, the latest move by Beijing to scale up adoption of the digital yuan, also known as the e-CNY, as it transitions from a cash alternative to an interest-bearing deposit instrument.

The expansion comes after Beijing pledged to “steadily develop the digital yuan” in its latest five-year plan, the country’s blueprint document for socio-economic development. A draft Finance Law published on Friday recognised the digital currency as fiat currency equivalent to cash, while a new framework supporting the wider campaign took effect in January.

The additional banks would undertake functions such as opening wallets, currency exchange and payment processing, according to a source familiar with the matter. That followed a procurement statement issued by the Bank of Ningbo on Tuesday, soliciting vendors with e-CNY experience as it builds out its infrastructure for the digital currency.

The new additions include seven national joint-stock commercial banks: China Citic Bank, China Everbright Bank, Huaxia Bank, China Minsheng Bank, China Guangfa Bank, SPD Bank and Zheshang Bank, according to Shanghai Securities News. Five city commercial banks – including the Bank of Ningbo – will also be added.

Only 10 banks – including China’s six major state-owned banks – are currently integrated into the digital yuan network.

Under the central bank’s supervision, the commercial banks would be responsible for the e-CNY’s day-to-day operations as well as compliance checks related to areas such as anti-money laundering and identity verification.

South China Morning Post