Exclusive-From lottery draws to fiscal spending, China broadens digital yuan footprint

May 30 (Reuters) - China's central bank is making a broad push to increase the use of digital yuan at home and abroad, several industry sources said, setting Beijing on a different - and potentially competing - path from the United States in shaping the future of money.

In a series of measures, many revealed here for the first time, the People's Bank of ‌China (PBOC) is giving banks policy incentives and behind-the-scenes directives to expand the use of digital yuan, also known as e-CNY, in areas ranging from lottery draws to green electricity charges and fiscal ‌spending.

Banks are also being pressed to grow digital yuan use in cross-border transactions, particularly along Belt and Road Initiative routes, with lenders racing to develop compatible products including loans, letters of credit and bills, the sources said.

All the sources declined to be named as they ​were not authorised to speak to the media.

China's bet on the digital yuan is in stark contrast with the U.S., where President Donald Trump has embraced stablecoins while banning domestic circulation of central bank digital currencies.

Some of the industry sources said Beijing's move is partly driven by a desire to reduce its dependence on a global payments system dominated by Western institutions and anchored to the dollar as the world's reserve currency.

The digital yuan serves as a technological backstop, helping ensure China's international trade flows continue uninterrupted during future geopolitical shocks, a concern underscored by external instability linked to the Middle East war, one of the ‌industry sources said.

"The war has exposed the risks of dollar weaponization, highlighting the ⁠urgent need for de-dollarization among Middle East oil producers," brokerage China Securities Co wrote in a report, saying the Iran conflict is accelerating yuan internationalisation.