Several Chinese cities are planning to support trials of China’s digital Yuan, as the country moves closer to becoming the first nation to launch a CBDC.
Beijing and Shanghai, and Guangdong are leading a list of major cities to test the digital yuan. The accelerated testing phase comes after a successful year for the state-backed digital currency used in most major cities.
The Mayors of the mentioned cities pledge in work reports that their regions would offer new pilot programs this year for the Digital Currency Electronic Payment (DCEP).
Integration of the Digital Yuan
One of the cities leading this testing phase is the capital, Beijing. Chen Jining, Beijing Mayor, will lead the initiative according to a report by the Chinese English language outlet Global Times.
Jining recently said that the city would accelerate innovative demonstration zones for fintech and professional services this year. One of the ways it will achieve this will be through the integration of the digital yuan.
Beijing Mayor said this when delivering a local government report at the opening ceremony of the fourth conference of the 15th Beijing Municipal People’s Congress.
Ma Xingrui, governor of South China’s Guangdong Province, promised that the authorities would support Shenzhen’s development into an innovative pilot zone for the country’s digital currency.
On Sunday, Shanghai Mayor Gong Zheng said that the city would continue financial opening-up and promote the CBDC.
Broader Financial Development
Neither of the cities’ People’s Congress work reports gave details on planned trials. However, they linked digital yuan pilots to more comprehensive plans for financial development.
Guo Weimin, the chief scientist at the state-owned Bank of China, also called for the country to speed up the adoption of a digital currency because of the economic challenges caused by the current pandemic. He said that a digital currency would make it easier to trace cash flows and enforce financial regulations.
China has not publicized a timetable for an official launch of the DCEP; however, the People’s Bank of China (PBOC), the country’s central bank, hopes to accelerate the test of the digital yuan before the start of the 2022 Winter Olympics, scheduled to take place in Beijing next February.
Digital Yuan trials
As of last week, Shenzhen had done three digital yuan trials. The first two made 30 million digital yuan available to residents of two districts selected by lottery. The latest pilot distributed 20 million digital yuan to qualifying local businesses.
The DCEP was distributed using digital red envelopes inspired by gifts traditionally given during holidays and special occasions. The tradition’s digital upgrade was popularised by mobile payment platforms Tencent Holdings’ WeChat Pay and Ant Group’s Alipay.
According to one industry expert, pilot testing is only the first step of a long march. Once launched, the CBDC will reshape China’s financial industry and unleash a promising digital finance service sector worth billions of yuan.