As per Global Times, the two largest cities in China – Beijing and Shanghai – will be joining the Digital Yuan project. The capital city’s mayor said that they would be hastening the development of “demonstration zones” for fintech and professional services over 2021. This effort will include promoting a pilot application for the Chinese CBDC, officially called Digital Currency Electronic Payment (DCEP). Shanghai’s mayor also made a similar pledge.
What Is The Digital Yuan?
The DCEP or digital Yuan is the Chinese CBDC overseen by the People’s Bank of China (PBOC). The initial tests had been carried out in Shenzhen, Suzhou, Xiongan new area, and Chengdu. The circulation of the DCEP goes from the PBOC to the public via local banks or financial institutions.
What is DCEP’s Technical Design?
The CBDC uses a two-layer architecture and a two-tier delivery system. This dual offline technology ensures that the transaction will get processed even if China’s online banking and other virtual payment platforms go offline. The DCEP will also not be tied or dependant on the users’ bank accounts, and they will work independently from China’s existing banking system. They will also be backed by the nation’s credit to ensure price stability.
Shenzhen To Do Their Third DCEP Trial
Shenzhen has announced its third trial of DCEP, allowing the public to get their hands on the national digital currency via lottery-like giveaways. Many industry observers believe that these announcements mark a more significant push to promote the digital currency before launching in the “near future.”
The registration for this event opened up on Wednesday for businesses and employees of enterprises staying in Shenzhen’s Longhua district during the Spring Festival. The previous lotteries were strictly for the city’s residents. The winners have to download an app to transact the digital coins.
This pilot aims to test China’s in-development central bank digital currency in the hands of the public. The lottery winners can spend these coins at 3,500 stores equipped with the appropriate point-of-sale technology.
Authorities in the Guangdong Province also said that they would be supporting Shenzhen’s overall development as an “innovative pilot zone” for the digital yuan. The city of Suzhou held a similar trial in December, also handing out 20 million DCEP.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.