Banking News

Chinese cities Changsha, Beijing join broader tests of digital yuan

digital yuan dcep currency renminbi

Chinese city Changsha handed out free digital yuan to its citizens via a lottery on May 31 as a part of the People’s Bank of China central bank digital currency (CBDC) trials.

The “red packets”- a reference to China’s traditional way of gifting cash – each contain 100 to 200 yuan ($15.66 to $31.33) were given to 300,000 winners of the lottery on May 31. According to a report from the Chinese media Sina News, a total of 1.324 million citizens in Changsha participated in the lottery.

In the capital Beijing, a similar lottery will be held on June 5, amid the city’s preparation for building a digital yuan acceptance environment for the 2022 Beijing Winter Olympics.

A total of 40 million yuan ($6.2 million) will be distributed to 200,000 lottery winners, who must download, register, and sign up for the digital yuan app providing their identity. The winners will have to use their prizes at designated merchants around the capital by June 20, Sina News reports.

This is the second time Beijing used a lottery to promote the usage of the digital yuan. In February this year, Beijing’s first trial was launched to celebrate the one-year countdown to Beijing Winter Olympics. A total of 10 million yuan ($1.55 million) was distributed to 50,000 people. According to state media Global Times, it was also to stimulate consumption for the 2021 Chinese New Year.

China is eager to promote its eCNY CBDC. At least eight major cities have rolled out trials, including Shanghai, Suzhou, Chengdu. The most recent trial before Changsha was in the border city Shenzhen, where 500,000 users participated in April.

Currently, the digital yuan has not been widely distributed in China. Users can only spend digital yuan at designated shops in certain regions. The most commonly used non-bank mobile payment platforms in China are private companies Ant’s Alipay and Tencent’s WeChat Pay, which are not compatible with each other.

But the digital yuan can co-exist with payment platforms. China’s e-commerce giant JD.com has successfully demonstrated how the digital yuan can be moved seamlessly between organizations and networks.

The standardization and interoperability of the digital yuan could erode the dominant position of Alipay and WeChat Pay.

Meanwhile, Alipay made its first appearance in a digital yuan trial in March this year. Some Alipay users can now use the digital yuan within the Alipay app.


Image Copyright: niphon / BigStock Photo