(Yicai) April 3 -- China has granted 12 commercial banks the license for digital yuan operations, more than doubling the list of authorized institutions to 22 and marking the largest expansion since the currency's launch in 2019.

Bank of Beijing, Bank of Jiangsu, Bank of Nanjing, Bank of Ningbo, Bank of Suzhou, China Citic Bank, China Everbright Bank, China Guangfa Bank, China Minsheng Bank, China Zheshang Bank, Huaxia Bank, and Shanghai Pudong Development Bank have connected to the Chinese central bank's digital yuan system and will commence e-yuan operations once they complete operational and technical preparations, the People's Bank of China announced yesterday.

Before this expansion, the 10 licensed operators for digital yuan operations were seven lenders -- Agricultural Bank of China, Bank of China, Bank of Communications, China Construction Bank, China Industrial Bank, China Merchants Bank, Industrial and Commercial Bank of China, and Postal Savings Bank of China -- and mobile payment platforms WeChat Pay and Alipay, operated by Tencent Holdings and Alibaba Group Holding, respectively.

The e-yuan pilot program covered 17 provincial-level regions as of the end of last year, with 230 million individual digital yuan wallets and 19.1 million corporate wallets opened, according to the latest PBOC data. A total of 3.6 billion e-yuan transactions had been processed as of Dec. 31, amounting to CNY19.5 trillion (USD2.8 trillion).

The PBOC plans to further optimize the management system of the digital yuan, explore its positioning within the monetary hierarchy, and support more commercial banks in becoming operational institutions for e-yuan services, Governor Pan Gongsheng said last October during the Annual Conference of Financial Street Forum in Beijing.

In January, the PBOC released an action plan to strengthen the management and service system of the digital yuan, announcing that the e-yuan will enter the 2.0 era, expanding from only physical currency in circulation to also demand and time deposits.

The upgrade in the positioning of the e-yuan will address the potential risks of financial disintermediation that may arise during its development and reverse the previous awkward situation in which commercial banks could not profit from digital yuan operations, thereby invigorating their motivation to participate in the construction of the e-yuan ecosystem, an expert previously told Yicai.

Editors: Dou Shicong, Futura Costaglione