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While a defined date of the digital yuan launch has not been revealed, the current stride of opening up the wallet application to the public is a step closer to achieving the country’s CBDC dreams.
Major Chinese state-owned banks have started processing applications for digital yuan wallets from members of the public. As reported by The Block, the opened option for residents to apply for the country’s Central Bank Digital Currency (CBDC) wallet is only possible in two cities including Shanghai and Beijing, and marks a major move away from the invite-only model that has been employed thus far in the Digital Yuan trials.
According to the report, the six banks involved in this process include the Industrial and Commercial Bank of China, China Construction Bank, Agricultural Bank of China, Bank of China, Postal Savings Bank of China, and Bank of Communications. Only three of these banks extended the accessibility to residents in Beijing.
The processing of the applications takes about 24 hours during which users will receive an SMS with a prompt on how to download and set up the wallet. Key personal details such as real names, email addresses, and phone numbers are required for activation but government officials have noted the system is designed to protect user’s privacy concerns in relation to the digital yuan usage. Not every application filed is certain to be approved.
“Although the application criteria has not loosened up, we’ve opened it up to the public so the process is less restrictive than before,” an employee of a Beijing branch of the Postal Bank of China said in a media chat. “As the review process goes digital, the speed of getting applications approved will be much faster later on.”
Unlike pilot tests conducted in Suzhou, Chengdu, Shenzhen, and Beijing, access to the digital yuan through these wallets will not be earned by lottery, but the funds can also be spent or used for purchases anywhere the digital yuan is being supported.
Chinese Digital Yuan to Co-Exist With Existing Payment Systems
Although the digital yuan was created by the Chinese Central Bank to help keep the dominance of existing payment systems including Alipay and WeChat Pay in check, Bloomberg reported that the planned digital currency will co-exist with these private digital payment service providers.
Per the report, Mu Changchun, director of the People’s Bank of China’s digital currency research institute, noted that the development of the digital yuan is imperative in order to protect the monetary and payment ecosystem of the country in the advent that either of these dominant service providers suffers a financial or technical hiccup.
“If there is something bad happens to them, financially or technically, that could bring negative impact on the financial system’s stability in China,” said Mu. “To provide a backup or redundancy for the retail payment system, the central bank has to step up” and provide digital currency services, he said.
While a defined date has not been revealed as to when the digital yuan will launch officially, the current stride of opening up the wallet application to the public is a step closer to achieving the country’s CBDC dreams.