(ATF) Pilot programmes of China’s central bank digital currency (CBDC) will soon start in selected regions, including Xiongan New Area in Hebei province.
The trial run will focus on consumption scenarios such as catering and retail sales, according to media reports.
A number of enterprises in Xiongan, including cafes, restaurants, bookstores and hotels, have joined the trial, working with State-owned banks and leading internet companies to test the country’s first digital version of renminbi issued by the People’s Bank of China (PBoC), the reports said.
Local government employees in Xiangcheng district of Suzhou, Jiangsu province, whose salaries are paid through accounts in the country’s “big four” banks – Bank of China, China Construction Bank, Agricultural Bank of China and Industrial and Commercial Bank of China – have been asked to install “digital wallets “on their cellphones this month, according to the local government.
A part of their salaries will be paid in central bank digital currency starting from next month, the notice said.
A report from Sichuan Newsnet said that more plans of the trial in Chengdu, Suzhou and Shenzhen are expected to debut before or after the May Day holiday. Chengdu will apply the digital currency in online and offline consumption activities, Xiongan will mainly use it in clearing services, while in Shenzhen, bank employees will pay taxes with the digital currency, said the report.
The digital currency research institute of the PBoC confirmed earlier this month that China has started testing its government-backed digital currency in some regions before it is introduced to the public.
“Compared with paper notes and coins, the digital currency can cut issuing costs, such as expenses on printing, transportation and management,” said Dong Ximiao, a researcher at National Institution for Finance and Development.
The digital yuan will partly replace cash in the future but will not yet eliminate all banknotes.
“Paying with cash and digital currency will coexist for a long time,” said Dong.
While existing electronic payment methods such as Alipay and WeChat Pay rely on the internet, digital currency can be exchanged offline when two cellphones get close to each other.
It had been feared that research into the CBDC would be delayed by the onset of the coronavirus outbreak. Global Times had reported in February that the epidemic’s impact on staff working on the project has resulted in significant setbacks.