Blockchain for Banking News

Results of China’s central bank digital currency giveaway worth $1.3 million

china yuan renminbi central bank digital currency

On 18 October 2020, the People’s Bank of China (PBOC) and the Shenzhen municipal government concluded the “Luohu Digital Renminbi Red Packet” giveaway. While 50,000 people were awarded 200 yuan in central bank digital currency (CBDC), only 47,473 claimed the money.  

The trial was designed for people to be able to spend the money directly rather than give it to someone else. As a result, within the 12 – 18 October window, 92% of the funds or ¥ 8.76 million ($1.31 million) was spent at 3,000 participating retailers in the Luohu district. Some people added additional money to their wallets, and they can continue to use the wallet even though the pilot is complete.

The eCNY lottery began on 9 October, giving people two days to register for it on PBOCs digital yuan app, with over 1.9 million people applying. The selected winners were sent text messages informing them of their win, and each received a digital red packet of 200 yuan (just under $30). However, those who did not win the digital currency did receive a participation medal. 

This lottery trial comes after another red packet giveaway in Luohu to 5,000 medical and healthcare workers as a way of thanks for their COVID-19 contributions. The digital renminbi trial was conducted to encourage spending after the COVID-19 pandemic severely impacted consumption. 

Another key reason for issuing the CBDC is to prevent over-reliance on private payment systems such as Alipay and WeChat Pay. However, the digital wallets are designed to hold only limited amounts of cash to avoid threatening the role of retail banks. 

Shenzhen State has big plans for the financial sector, with China’s State Council announcing a reform program on 11 October. The ‘Shenzhen Comprehensive Reform Trial Implementation Plan’ contains multiple fintech initiatives, including the creation of a platform by the Chinese CBDC Research Institute in Shenzhen. The Implementation Plan seeks for more closed trials of the digital currency, one of which was this Digital Renminbi giveaway.

The reform program’s announcement comes after recent widespread reports China was significantly expanding its digital yuan trials. The Governor of the PBOC, Yi Gang, previously confirmed the initial internal testing regions included Shenzhen, Suzhou, Xiong’an, Chengdu, and future Winter Olympics locations. It was reported that additional areas include Beijing-Tianjin-Hebei, Yangtze River Delta and the Guangdong-Hong Kong-Macao Greater Bay Area. However, these are regions where the Ministry of Commerce plans tests that may involve the eCNY over the next three years, rather than necessarily imminently.

Image Copyright: Sikov / BigStock Photo