Riding the digital tides:Analyzing the digital yuan’s present and possible future

Central bank digital currencies (CBDC) are being considered in many countries - as a novel form of digital public money issued and backed by the state. One of the most extensive and advanced of these schemes is China’s e-CNY or ‘digital yuan’ pilot. It is also one of the most discussed. And yet it is perhaps one of the most mysterious, owing to the reticence of Chinese officials, the complexity of the pilot, and the wide variety of options available to Chinese authorities for future development of the e-CNY and the broader digital asset ecosystem within China. This note takes stock of<br/>the current status of the e-CNY, emphasizing its core infrastructure, existing use cases and the ‘managed anonymity’ model. Looking forward, how the e-CNY may fit into a digital financial system, how it may underpin non-financial and government activities, and how it may promote the internationalization of the renminibi is also discussed. We argue that external observers may be somewhat exaggerating the individual importance of the e-CNY scheme to the Chinese government. Ultimately, the e-CNY should be regarded as only one piece of a broader, coordinated drive to modernize the Chinese economy and how the government interacts with it.