To go big with central bank digital currencies (CBDCs) – to gain scale and early adopters – one should focus on retail and smaller-value transactions. At least that’s the strategy gaining momentum in China, as the country reportedly moves toward making the digital yuan a reality.

Global Times reported on Monday (Aug. 24) that the People’s Bank of China (PBOC) has said that a test of a CBDC has been focused on small retail transactions – and has not included large-volume transactions.

That statement seems designed to quell rumors that a transaction involving the country’s digital currency electronic payment (DCEP) was tied to a large-scale real estate sale. There were initial reports, too, that the sale involved a local bank, and that the digital yuan were not convertible into banknotes, according to Global Times.

But the paper quoted a central bank employee as saying that the CBDC is legal tender and fully convertible with banknotes at a one-to-one ratio.

“At its current stage, the test’s primary goal is to ensure the digital currency’s operation runs smoothly and safely and to determine how DCEP is distributed from the central bank to financial institutions,” Wang Peng, assistant professor at Renmin University’s Gaoling School of Artificial Intelligence, told Global Times. “Only when trials in retailing are successful will they be carried out in large transaction scenarios.”

That implies retail transactions first, and then large-value transactions later. Previously reported trials still proceed apace in provinces and cities, including Shenzhen, Chengdu and elsewhere.

By testing its CBDC efforts with a focus on retail transactions, the bank might be scaling into an official launch of its digital yuan in piecemeal fashion. And it’s likely concentrating its efforts on domestic transactions in order to launch sooner rather than later.

Of course, limiting the digital yuan’s reach means that China’s desire to challenge the U.S. dollar’s dominance on global markets will get pushed out a bit. But by looking toward retail transactions, might the scaling be done by vertical transaction amount or even region?

The clarifications on China’s efforts come at a time when various central banks are warming up to the deployment of digital currencies. But if China is indeed bringing digital yuan to the masses, other central banks will sit up, take notice and accelerate their efforts.

However, gaining speed to market when it comes to CBDCs is no easy task. Jim Cunha, senior vice president of secure payments and FinTech at the Federal Reserve Bank of Boston, told Karen Webster as much recently when discussing joint CBDC efforts between the Fed and the Massachusetts Institute of Technology. He said they’re looking at publishing papers and open source code, as well as exploring various platforms to underpin CBDC issuance over a period of several years.

But a new working paper on Monday (Aug. 24) from the Bank of International Settlements shows that the pandemic has led to increased interest among central banks for CBDCs.

“Social distancing measures, public concerns that cash may transmit the COVID-19 virus and new government-to-person payment schemes have further sped up the shift toward digital payments,” the report said.

The share of central banks looking toward retail CBDCs in a one- to six-year timeframe had already doubled in 2019 (before COVID-19 took root) to 20 percent. The report also found that as many as 80 percent of central banks are engaged in research, experimentation or development of CBDCs.