Over 10 million RMB is to be distributed to residents as part of China’s digital currency tests
The Shenzhen Government announced yesterday it would be testing the new digital currency in collaboration with the People’s Bank Of China (PBOC) by giving away 10 million RMB ($1.49 million) to local citizens. The handouts, funded by Shenzhen’s Luoho District, can be spent at over 3,000 merchants in the local area next week, according to the South China Morning Post.
The Digital Currency Electronic Payment (DCEP), as it is known, will be awarded through a lottery, with 50,000 digital red envelopes of 200 RMB ($30) each being distributed. Residents can enter through iShenzhen, a blockchain app launched by the Shenzhen government last December for citizens to verify legal documents online, with the winners announced on Sunday.
A DCEP wallet will be required to benefit from the lottery, and according to crypto wallet app HashKey Hub’s Head of Marketing, Mo Li, “… there are four wallets developed by the major 4 commercial banks”.
It’s hoped the move will stimulate consumption in Luoho and provide public trails of the digital currency in China’s fastest-growing city. This latest announcement is part of a longer term pilot run of the digital RMB: China’s Ministry of Commerce announced back in August that tests of the DCEP project will take place in the Beijing-Tianjin-Hebei region, the Yangtze River Delta region and the Guangdong-Hong Kong-Macao Greater Bay Area, which includes Shenzhen.
China has become the first major economy to test an official digital currency in the real world. Governor of the PBOC, Yi Gang, said “The research on and the application of the central bank digital currency can help efficiently satisfy the public’s demand for fiat money in the context of digital economy, and improve the convenience, security and anti-counterfeiting features of retail payments, thereby speeding up the development of China’s digital economy” in a statement published in May of this year.
He added that tests would also be conducted at “… some scenarios of the coming Winter Olympics to verify the reliability of theories, stability of systems, usability of functions, convenience of processes, applicability to scenarios and controllability of risks.”
More recently, Japanese vending machines known as Gashapon, which have become a popular fixture in Chinese shopping centres, have been added to the list of places where the PBOC are running DCEP tests. In addition, some US brands, such as Subway, Starbucks and McDonald’s have agreed to take part in digital currency tests, according to the PBOC.
Overall, more than 1.1 billion RMB ($164 million) worth of DCEP transactions have taken place in China over the last 12 months, which could be the first step towards China becoming a cashless society.