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The free digital yuan currency awarded in the lottery can be spent only in 3389 stores that are set up to handle electronic payments.
As China continues to roll out its digital yuan currency gradually into the market, some Shenzhen residents had something to celebrate on Monday as they received free digital yuan into their wallets. According to media outlet AsiaOne, 1,913,847 Shenzhen residents signed up to take part in the latest trial for China’s sovereign digital currency. However, only 2.61% of the applicants were successful and received 200 digital yuan in the lottery. Plans to distribute 10 million digital yuan were announced by Luohu district officials.
China’s central bank is in a series of trials to test its new digital currency in the market. Notably, the free digital yuan currency awarded can only be spent in 3389 stores that are set up to handle electronic payments.
The red packets, as they are referred to, will be accepted in the designated shops from Monday to Sunday, whereby they are non-transferrable to other individual or regular bank accounts.
As the roll-out process goes on, there is a faction of Chinese people who are worried the senior citizens and the children might be left out in the process. The reason why it requires users to open an e-wallet via the official Digital Renminbi App, which is currently not available for public download.
However, since it is the testing phase of the digital currency, perhaps there are mechanisms set out to handle the issue in the near future.
Role of the Digital Yuan Lottery
The digital yuan, officially referred to as the Digital Currency Electronic Payment (DCEP), is part of China’s bigger plan to migrate towards a cashless society. China is seeking to be a global leader in the digital currency roll-out, hence allowing other countries to borrow from its project if successfully managed.
Notably, China is also seeking to dethrone the United States dollar as a global reserve currency. This is primarily seen as other countries push to develop CBDCs that are interoperable with existing blockchain technologies.
However, the United States recently partnered with other six global central banks together with the Bank for International Settlement to highlight key features of expected best performing CBDC. This perhaps motivates China to roll out its digital yuan diligently to attract global customers.
Notably, the country has been testing the digital yuan in other cities including Suzhou, Chengdu and Xiongan. It is reported that a total of 3.13 million transactions have been processed using the digital yuan currency, according to Fan Yifei, the deputy governor at China’s central bank.
The success of digital currencies will largely promote the ongoing global cryptocurrency adoption, rather than being competitors.