By
Tolu Ajiboye
April 17th, 2024
It is expected that 19 restaurants and retail shops will take part in trials of China’s central bank digital currency in the Xiong’An district. McDonald’s, Starbucks, Subway, JD Supermarkets are said to be among them.
Recently, the cities of Shenzhen, Suzhou, Xiong’An, Chengdu started testing China’s Central Bank digital currency. According to the local media outlet InterChain Pulse, 19 restaurants, entertainment companies, and retail shops will help conduct the trial in Xiong’An district in Hebei province. Among them are McDonald’s, Starbucks, Subway, and JD Supermarkets. Such a decision was a result of the meeting that the Reformation and Development Commission, the reform and development bureau of the Xiong’an New Area management committee, organized. Several digital currency research and development institutions and pilot merchants participated as well.
Xiongan branches of Chinese major commercial banks will also take part in the trial. Those are the Industrial and Commercial Bank of China, the Agricultural Bank of China, the Bank of China, and the China Construction Bank. In particular, they will be piloting a wallet app for the digital currency. Moreover, the Agricultural Bank of China has even tested the DC/EP (digital currency/electronic payment) for the app.
Chen Bo, director of the Finance Research Centre at the Central University of Finance and Economics, said:
“There will be two types of players in future trials, the banks and telecom companies. At present, the central bank is testing the software of DC/EP, and whether it will be combined with 5G and sim cards in the future needs to be discussed.”
What Is China’s Central Bank Digital Currency?
In 2014, the People’s Bank of China, the country’s central bank, started research on its digital legal tender. At the end of 2017, the Chinese State Council approved the digital currency development program PBOC proposed in collaboration with some commercial banks and institutions.
The currency, called “digital currency and electronic payment”, or DC/EP, will have a two-tier structure. It will involve the central bank issuing the currency to banks or institutions. In turn, these banks will circulate the currency amongst their customers. While there will be a certain control of the currency, the central bank wants to remain technology agnostic.
As for payments, they will be contactless. In other words, the transaction will be over when two mobile phones with electronic wallets get close to each other. Besides, it will be possible to exchange the currency without the internet, just like using physical cash.
People’s Bank of China stated:
“In the short term, the central bank’s digital currency will not be issued in large amounts for the public and the velocity of the money in circulation will not be influenced or lead to an inflation surge.”
According to PBOC’s representative Zhou Xuedong, the coronavirus pandemic will not disrupt the currency launch. The current testing means China is close to the release. Some officials stated that the possible launch date is the 2022 Winter Olympics event, others hint at mid-2021.