China’s Ministry of Commerce has announced that pilot testing of a central bank digital currency (CBDC) developed by the People’s Bank of China (PBoC) is to be expanded to cover the country’s major commercial regions and cities including Beijing, Shanghai, Hong Kong and Macau.
PBoC, China’s central bank, announced in April 2020 that it was to conduct closed pilot tests of the digital currency in Shenzhen, Suzhou, Xiong’an New District, Chengdu, and at Beijing 2022 Winter Olympics locations.
Multiple banks and telecoms operators, Starbucks and McDonald’s, ride-hailing giant Didi Chuxing and online grocer Meituan-Dianping are among major participants in the Digital Currency/Electronic Payment (DC/EP) pilot.
With the latest expansion, the pilot areas will now also include the Beijing-Tianjin-Hebei region, the Yangtze River Delta and the Guangdong-Hong Kong-Macao Greater Bay Area plus “pilot regions in the central and western regions where conditions permit,” the Ministry says.
Employees of the Agricultural Bank of China, Industrial and Commercial Bank of China, China Construction Bank and Bank of China are all reported to be taking part in the pilot.
“These users are required to open digital wallets with at least one of the banks, which are then connected to their bank account,” according to local tech news site Technode.
“They then download the digital yuan app, which uses their ID number to check if they are whitelisted to use the digital currency. The app connects to their digital wallets, which in turn connect to their bank accounts.”
“The new DC/EP currency is a digital currency and electronic payment tool. 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,” a PBoC official explained last year.
The idea is that it will be distributed in the same way that 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,” he explained.
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”.