Yesterday the Shenzhen municipal government announced a giveaway of ten million renminbi ($1.5 million) in central bank digital currency (CBDC). Fifty thousand people will receive the gifted money on a lottery basis in amounts of 200 yuan as part of the digital yuan tests.
The trial is in the Luohu District, following another red packet gifting in the same area to 5,000 medical and healthcare workers as thanks for their COVID-19 contributions.
To date, most digital yuan tests have been rather limited, focused on government employees. This latest give away is a far more broad and public test, engaging the general public. There’s no better way to gain interest than giving away free money! One could argue it’s a little like an airdrop for public blockchains.
One of the biggest challenges for the eCNY will be adoption. Most Chinese citizens are quite happy with using existing digital payment solutions Alipay and WeChat Pay. One of the key reasons for issuing the digital yuan is to prevent an over-reliance on these private payment systems.
This week we reported that to date, 113,300 personal digital wallets for the eCNY have been created in trials and $160 million in transactions have been processed.
Commercial banks are the main gateways for the People’s Bank of China to issue the currency, much like the way cash is distributed to consumers. Wallets can only hold limited amounts of cash in order not to threaten the role of commercial banks.