China's digital yuan faces corruption and slow adoption

China's digital yuan (e-CNY), once viewed as a significant development in the realm of central bank digital currencies (CBDCs), is facing various obstacles. 

These include corruption scandals and slow adoption, compounded by the continued dominance of major online payment platforms like Alipay and WeChat Pay in China. 

A major issue for the digital yuan project has been the removal of Yao Qian, a key architect behind the e-CNY, following bribery allegations related to cryptocurrency. 

This incident has raised concerns regarding the transparency and integrity of the digital yuan’s rollout, complicating its progress. 

While the digital yuan has seen some growth in terms of total transactions, with 7 trillion yuan ($968 billion) processed by June, its global usage remains limited. 

The digital yuan currently accounts for only 2.93% of international payments, a small fraction compared to other major currencies like the US dollar and the euro. 

This modest share suggests that, despite its domestic adoption, the digital yuan has not yet gained significant traction outside of China. 

Experts suggest that the success of the digital yuan depends on its integration into practical applications such as fiscal subsidies and consumer incentives, which could help drive greater adoption. 

Tools like "hard wallets" could also support its use in day-to-day transactions. 

The global appeal of the digital yuan is constrained by the limited international use of the yuan itself. 

Although the digital yuan is part of China’s broader strategy to reduce reliance on the US dollar for cross-border payments, the yuan's lack of widespread international acceptance presents a significant challenge. 

This issue may limit the digital yuan’s role in global trade and finance. 

Despite these challenges, analysts point out that China's push for a digital currency aligns with a wider global trend towards CBDCs. 

However, the digital yuan’s future will depend on overcoming these hurdles both domestically and internationally. 

As of now, its broader use remains uncertain without wider international support.