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The Chinese digital yuan is expected to be the first among other global central bank currencies to enter the public space.
As a new year gift to Shenzhen residents and part of the digital yuan public test, China’s central bank has offered a 20 million yuan red envelope to be distributed and used between January 7 and 17. According to the press release, each “Fukuda Gifts Digital RMB Red Packet” will be worth 200 yuan or approximately 30$. The lucky winners are to spend the red envelope at over 10,000 merchants that have registered with the program. Taking into account that it is a heavily populated city, a digital yuan lottery draw will be used to determine the winners instead of a first come first served policy.
Notably, this event is a routine test in the digital RMB research and development process that the Chinese central bank embarked years ago.
This is the second such event in Shenzhen but the third countrywide. Whereby the first one happened in October in Shenzhen that entailed $1.5 million meant for 50,000 residents at approximately 3000 merchants. The second event took place in December in the city of Suzhou. The event ended on December 27 having spent nearly $3 million after 96,614 lottery winners collected their digital yuan red envelopes.
In all the past similar events, China’s central bank was in a quest to test particular features in order to improve the overall digital yuan performance. Apparently, the latest Shenzhen test will not encompass some of the prior features in the Suzhou test, including the online payment option and the offline touch-to-pay function.
Notably, the Suzhou test helped the developers identify a technical issue, particularly a bug with the offline touch-to-pay function.
Digital Yuan Lottery and Chinese CBDC from Different Perspectives
The Chinese digital yuan is expected to be the first among other global central bank currencies to enter the public space. As the country morphs to fit in the changing global economy; a scalable, secure and interoperable yuan can put the country ahead of other countries in the recovery process.
Notably, China has in the past few years been moving away from the dollar dependency and seeks to depose it as the global reserve currency. With both China and the United States at loggerheads over the changing technology industry, a successful digital yuan could push Washington to further the digital dollar quest.
Furthermore, the cryptocurrency industry has significantly disrupted the banking and payment industry.
Chinese central bank is also fighting to overthrow existing payment systems including popular apps, WeChat and Alipay that have millions of active customers. Once completed and launched, China will be in a position to monitor the payment system thus able to make informed decisions on further progress.