The People’s Bank of China has declared the extension of its digital yuan tests by ten times, which is a major step in the advancement of central bank digital currencies (CBDCs) around the globe. According to the People’s Bank of China (PBOC), the central bank digital currency (CBDC) also known as the e-CNY, is now available for use in all the major cities of China, increasing its coverage to over 500 million people.

This expansion is a drastic increase of the project’s scope, which had been previously implemented only in certain regions and for certain applications. The move comes ahead of China’s plan to become a world leader in the use of CBDCs in a bid to phase out the traditional payment systems.

The new trials will enable Chinese citizens to spend the digital yuan for a variety of purposes, including consumption, payments for utility bills and even international money transfers in some of the test zones. In order to promote the usage of the digital yuan across the country, PBOC has allied with the prominent tech giants of China such as Alibaba and Tencent to implement this digital currency with their most used mobile payment applications.

This latest development has thus brought back the interest of other major world economies in CBDCs. The European Central Bank that has been developing its own digital euro project has stated it is to step up its efforts due to China’s advances.

Likewise, the Federal Reserve in the United States has ramped up its investigation of a possible digital dollar with several pilot projects currently in progress with large banks. The aggressive adoption of the digital yuan has also caused some policy makers and economists to worry about the impact of this digital currency on global financial structures as well as monetary sovereignty.

There are some voices who opine that the digital yuan may undermine the US dollar’s hegemony in the international market and change the very nature of the global economy. Some privacy advocates have also raised concerns over the level of control that CBDCs could afford especially the Chinese digital Yuan.

Although the PBOC has stated that the e-CNY will not infringe on user privacy, some critics do not believe the Chinese government since the country is well-known for spying on its citizens. With the race for CBDCs now well and truly underway, many are waiting to see how other nations will react to China’s actions in the digital currency sphere.

The consequence of these trends may be the transformation of the very nature of money, the changes in the principles of international trade and the shift of the global economic power in the future years.