China’s central bank confirms plans for digital currency pilots

Internal closed pilot tests of the central bank digital currency (CBDC) developed by the People’s Bank of China (PBoC) are to be conducted in Shenzhen, Suzhou, Xiong’an New District, Chengdu, and at Beijing 2022 Winter Olympics locations, China’s central bank has revealed.

People's Bank of China logo

The goal of the trials will be “to continuously optimise and Improve the function” of the digital currency, the PBoC says.

“According to the relevant person in charge of the People’s Bank Digital Currency Research Institute, the current research and development of digital RMB is steadily advancing,” it adds.

The pilot tests do not, however, mean that the digital currency is ready to be officially issued, the central bank emphasises.

“The new DC/EP currency is a digital currency and electronic payment tool,” Mu Changchun, director of the PBoC’s Digital Currency Research Institute, revealed in September.

“Its functional attributes are exactly the same as paper money, but it is just a digital form. We define it as a digital payment tool with value characteristics.”

Transactions made using the digital currency will maintain the anonymity and main value characteristics of cash, he explained, and will not be tied to a bank account.

It will also be distributed in the same way as bank notes are distributed today.

“Commercial banks open accounts at the central bank, paying 100% of the total amount, and individuals and businesses will open digital wallets through commercial banks or commercial organisations.”

Citizens will then be able to make payments by installing a DC/EP wallet on their mobile phone and transferring funds into their digital currency account.

No network connection is needed for a transaction to be made and “as long as the two mobile phones touch each other, the transfer function can be realised”.

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