Amid the ongoing Covid-19 pandemic and global financial gloom, China seems set to launch the world’s first digital currency in the weeks ahead.
The central bank digital currency or digital yuan, is officially referred to as the digital currency/electronic payment (DC/EP) project.
It’s not a new currency but a digitised version of the existing Chinese currency yuan, which will be disbursed via a digital wallet.
The wallet doesn’t need to be linked to any bank account or card.
Five years in development, the DC/EP project has been largely shrouded in secrecy. Until now.
A number of articles in Chinese media this month indicate that the currency could be launched as early as next month in restricted, small pilot projects.
The government-affiliated Star Market Daily reported earlier this month that China’s big four state-owned banks, the Industrial & Commercial Bank of China, the China Construction Bank, the Agricultural Bank of China and the Bank of China have begun testing the digital currency.
On Thursday, another state media report gave details about the upcoming cautious launch of the currency.
“The Chinese central bank’s digital currency DC/EP project will be tested in Xiongan New Area in north China’s Hebei province, with a trial run in local catering and retail industries including US coffee chain Starbucks, fast food chain McDonald’s and the Qingfeng Baozi (stuffed bun) restaurant chain,” the state-run tabloid Global Times reported.
Employees from selected companies will be allowed to open digital wallets and operate them within the Xiongan New Area, a new development coming up about 100 km from Beijing.
Three other cities — Shenzhen in southern China’s Guangdong province, Suzhou in eastern China’s Jiangsu province, and Chengdu in southwest China’s Sichuan province — will also test the central bank-backed digital currency.
The new digital currency falls in China’s way toward becoming a cashless society where hundreds of millions make payments via WeChat or Alipay, which are linked to bank cards.
“The DCEP will be powered partially by blockchain technology and dispersed through digital wallets. What sets it somewhat apart, however, are features that allow the central bank to track the movement of the currency and even supervise transactions,” the Reuters said in a report on DC/EP late last year.
The head of the Chinese central bank’s digital currency research institute, Mu Changchun, told a public forum last year that it was “almost ready”.
“However, in September, Chinese central bank chief Yi Gang said there was no timetable for its rollout and that it still needed to meet requirements, such as anti-money laundering,” the Reuters report said.