The aim behind the initiative is to allow the citizens to spend the digital yuan. According to Liao Qun, chief economist at China Citic Bank International, the program will spur consumption in Luohu district. Besides, it will stimulate using CBDC in consumers’ everyday lives.
Chine is progressing in the development of its central bank digital currency (CBDC), or digital yuan. Earlier, China revealed that the currency was out for testing in various sectors. Last week, one of the country’s fastest-growing city Shenzhen announced a public giveaway program that includes the distribution of 10 million digital yuan ($1.5 million). Within the program that was carried out via a lottery in the Luohu district of Shenzhen, 50,000 randomly selected residents received digital “red packets” containing 200 yuan worth of CBDC. Starting today to October 18, winners can spend the digital yuan at any of 3,389 shops in Shenzhen Luohu District.
As a post from the local government reads, nearly 2 million individuals signed up for the lottery. The results of the lottery were announced on Sunday. Winners received a link to open a digital wallet using the official Digital Renminbi App to claim the red packet. However, the app is currently unavailable for public download. According to the terms of use, winners can not transfer the money to other people or redeem it in one’s own bank account. The unused amount will be taken back from winners after October 18 if they don’t spend it.
The aim behind the initiative is to allow the citizens to spend the digital yuan. According to Liao Qun, chief economist at China Citic Bank International, the program will spur consumption in Luohu district. Besides, it will stimulate using CBDC in consumers’ everyday lives.
About Digital Yuan
People’s Bank of China (PBOC) first announced plans to present its own digital currency back in 2014. At that time, the government established a research institute dedicated to digital currencies and looking at how to improve the Chinese Yuan system with blockchain. According to the bank, with its own digital currency, China can diminish its dependence on the global dollar payment system.
Working on digital yuan, or digital currency electronic payment (DCEP) started in 2019. In April this year, the project piloted in four Chinese cities — Shenzhen, Suzhou, Chengdu, as well as Xiong’an. Then, PBOC started talks with private companies to expand its test run. Major firms such as China’s largest ride-hailing company Didi Chuxing and food delivery giant Meituan Dianping became the candidates to roll out the digital yuan on a large scale through their wide-reaching platforms. Streaming platform Bilibili, Chinese Uber, and Chinese biggest e-Commerce company JD.com also joined the project.
The launch date is not yet clear. But the progress on the project is so inspiring that there are now even talks about using the digital yuan at the 2022 winter Olympic games in Beijing.
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