Tencent-backed WeBank and Ant-backed MyBank are conducting “preliminary work under the guidance of the People’s Bank of China (PBOC)” in order to integrate the digital yuan wallet into their payment and banking services, according to a China Securities report.
The move comes as PBOC unveils a central bank digital currency (CBDC) ‘Bridge’ project for cross-border payments with the Hong Kong Monetary Authority, the Bank of Thailand and the Central Bank of the UAE and launches its latest ‘red envelope’ digital yuan giveaway in the city of Chengdu.
According to the China Securities report, Tencent’s WeBank and Ant’s MyBank will be the first privately owned banks to join the state-run financial institutions supporting the ongoing digital yuan pilot scheme.
Private online banks
The state-affiliated publication also notes that the involvement of private banks is part of an accelerated programme of CBDC infrastructure development.
“The construction of digital RMB cooperative banking channels has been accelerated,” the report says.
“The six state-owned banks have ‘innate advantages’ such as technology and branches, and they are directly connected in internal tests.
“A large number of city/rural commercial banks, rural credit cooperatives and village banks are expected to be connected through the curve of the system clearing platform.”
“Although considered to be competitive, third-party payment institutions and financial technology companies are also involved in the formulation of digital RMB solutions and scenarios,” the publication adds.
“At present, third-party payment companies mainly participate in the expansion of digital RMB application scenarios.
“In the digital renminbi pilot phase, several leading third-party payment institutions are mainly involved in the interface, standardisation and blockchain technology traceability verification of digital renminbi acceptance.”
In addition to the involvement of third-party institutions in domestic trials of the digital yuan, PBOC has announced that it has established the “m-CBDC Bridge project” with central banks in Thailand and the UAE and the Hong Kong Monetary Authority to explore the use of digital currencies for cross-border payments.
“The participants of the project will evaluate the feasibility of m-CBDC Bridge application in cross-border capital transfer, international trade settlement and foreign exchange transactions, among others,” state news agency Xinhua reports.
“The research project will build an enabling environment for more central banks in Asia and other regions to jointly conduct research on enhancing cross-border payment capacity to solve problems such as low efficiency, low transparency and high costs, the PBOC said.”
The Chengdu red envelope lottery, meanwhile, will see PBOC distributing a total of 40.2m digital yuan (US$6.2m) in varying amounts to just over 200,000 consumers.
As in previous large-scale giveaway trials, recipients will be able to download a digital yuan wallet and use it to make in-store payments at some 11,000 merchants and ecommerce purchases from JD Mall for two weeks in early March.
The most recent large-scale digital yuan red envelope trial took place in Beijing earlier this month