China’s digital currency: A small leap forward
A pilot scheme taking place in Shenzhen this week offers a glimpse into China’s plans to build the world’s first national digital currency.
China’s central bank is handing out Rmb10 million ($1.5 million) worth of free digital tokens to people living in a suburb of the tech-heavy city of Shenzhen this week, as it pushes ahead with plans to roll out a national virtual currency.
The test scheme – a pilot-within-a-pilot – started on Monday and will run to the end of Sunday.
Citizens of Luohu, located on the border with Hong Kong, were given 50,000 digital vouchers, each with a face value of Rmb200, which they can spend in any of 3,400 designated retail outlets, from petrol stations to supermarkets.
Regulators in Beijing and beyond will be watching closely. China is widely seen as a front-runner in this field. It has moved further and faster toward the formation of its own digital currency than any other economy or bloc, including the US and Europe.
In April, the People’s Bank of China (PBoC) began to test different versions of a new tender in four areas, including Beijing, Shanghai and Guangdong province, with the backing of six of the largest state banks and leading digital payments and e-commerce firms.
It has stress-tested real and hypothetical scenarios, sources said, including how a digital yuan would be spent at notable public events, including the 2022 Winter Olympics, to be held in Beijing.