China has been creating a state-owned cryptocurrency since 2014. The People’s Bank of China manages the DCEP — Digital Currency Electronic Payment project (“Digital currency and means of electronic payment”). In April 2020, the Agricultural Bank of China launched an application for using the national cryptocurrency in a test mode. The digital yuan is pegged to the regular yuan in a ratio of 1:1.
On December 5, the Chinese government launched another test of the digital yuan, according to the Xinhua news Agency. The authorities of Suzhou (Jiangsu Province) played “red envelopes” among the residents of the city for a total of 20 million digital yuan ($3 million). What opportunities does the new form of state currency open up? What difficulties did consumers face? How are the tests progressing? All this was found out by The Paper.
The previous mass testing took place in October in Shenzhen (Guangdong Province). It was attended by 50 thousand residents. Everyone received a “red envelope” worth 200 digital yuan ($30) as a result of a lottery draw. Four major banks participated in the program: Agricultural Bank of China, Industrial and Commercial Bank of China, China Construction Bank and Bank of China. In December, Bank of Communications and Postal Savings Bank of China joined the testing.
To participate in the drawing, those who wished had to register in a specially designed application and wait for the lottery results. On December 11, the winners were privately sent links to the Digital Yuan application with their envelopes for 200 crypto yuan. Until December 27, inclusive, they will be able to make purchases from participating sellers in the program. Unused funds will be returned to the state after this period.
Their lucky owners will be able to sell electronic coupons in 10 thousand points: shopping malls, supermarkets, retail stores, catering or when paying for household services. The People’s Bank of China provided payment terminals to sellers and compensated for staff training. This time, the e-commerce platform also joined the testing JD.com . There is no commission for transactions with digital yuan, unlike transfers using the Alipay system and WeChat wallet.