2022 Winter Olympics makes history by launching the world’s first major CBDC

The 2022 Winter Olympics were supposed to be a sort of coming-out party for the digital yuan, China’s CBDC. The People’s Bank of China, China’s central bank, has been trialing the digital yuan in several areas for years now and has started allowing foreigners to use the digital currency for the first time during the event. However, the digital yuan’s availability has attracted some concerns about giving China’s government new tools to monitor its economy and control a share of the global digital economy.

China’s new digital currency, the e-CNY, is being used to make above 2 million yuan (about $315,000) payments a day in its latest pilot at the Beijing Winter Olympics, a top official from the Chinese central bank (PBOC) has said.

The digital currency can be used through the government’s mobile app, e-CNY, or mobile payments platforms developed by private sectors, including Tencent Holdings’ WeChat, China’s messaging application with over one billion users.

The app’s launch was reportedly hampered by COVID-19 restrictions that saw athletes, officials and journalists are primarily separated from the rest of China in a quarantine “bubble” meant to prevent the spread of various strains of COVID. This bubble, combined with the government limiting the number of in-person spectators, has seemingly seen the number of people testing the digital yuan drop significantly.

However, other reports suggested that more transactions were made using the digital yuan on the opening ceremony than through Visa.

Transactions using the digital yuan have totaled more than $13 billion since its launch, with roughly 10 million merchants activating digital wallets by November 2021. Likewise, Visa’s $12.5 trillion volume dwarfs that figure for the 12 months ending June 30, 2021.

Speaking to Cointelegraph, Fergus Hodgson, director of financial consultancy firm Econ Americas, said that the Olympics have “have become a marketing opportunity for governments, usually one that loses money.”

A state-controlled commercial bank, Bank of China, has set up a number of special automatic teller machines (ATMs) at some central venues at the Games, inside the “closed-loop” of teams, officials and organizers.

Foreign currency banknotes can be inserted into them and converted into either e-CNY or regular yuan banknotes.

However, the e-CNY’s availability at the Games has attracted some concerns about cybersecurity and data protection. China’s digital currency is expected to give its government new tools to monitor its economy and control a larger share of the global digital economy

The perceived threat of a digital yuan on dollar hegemony has seen United States Secretary of State Antony Blinken and Treasury Secretary Janet Yellen warn against the digital yuan’s rollout at the Olympics, as it could supposedly threaten U.S. interests. In July, a group of three senators sent a letter to the U.S. Olympic and Paralympic Committee claiming that the Chinese Communist Party could use the CBDC to surveil visiting athletes.