- China expands the test pilot of the digital yuan.
- Citizens of Suzhou will be able to spend coins both online and offline.
The Chinese authorities plan to launch another digital yuan handout. This time the lottery with the so-called red packets will be rolled out in the city of Suzhou, Chinese insider The Paper reports.
Chinese authorities inspired by Shenzhen success
The test program with the digital yuan will be launched on December 12 to coincide with a Chinese year-end shopping festival known as Double 12. According to The Paper, local retailers and service providers have been integrating the infrastructure with Near Field Communication (NFC) technology and QR-code to start accepting payments in digital yuans. To process the payment, users will need to touch two payment devices.
Notably, this time the owners of the state-backed digital asset will be able to spend it offline, in brick-and-mortar stores. This feature was not available in the first digital yuan test to Shenzhen citizens, who paid their digital yuans only online. While the lottery’s exact conditions remain unknown, according to the preliminary information, the People’s Bank of China will distribute $1.5 million in digital yuan to Suzhou citizens.
The first social experiment with digital currency created by the People’s Bank of China took place in Shenzhen at the end of October. According to the South China Morning Post, nearly 2 million people participated in the lottery in hopes of getting digital money, but only 50,000 citizens received the red packets with 200 coins. The authorities distributed about 10 million tokens and about 80% of them were spent within the first week of the experiment.
Apart from that, Chengdu’s Chinese city is also performing a closed beta-testing of DC/EP wallets via “a large bank”.
China pursues a double-standard policy
The Chinese authorities are pushing hard with the digital yuan launch. The country wants to reap the benefits of being the first country that launches its state-backed digital currency. The industry experts believe that the pioneer will get the chance to become the financial capital of the world.
Thus, Zhao Changpeng, the head of the world’s largest cryptocurrency exchange by trading volumes Binance, noted that by launching digital currency China might attract massive investment inflows.
The first one to have a central bank digital currency working will be in a position to attract a lot of international usages, international volumes. This probably will help significantly in making RMB a more dominant currency in the world, and if that works, then I think that will put pressure on other central banks to get their own central bank digital currency out as soon as possible, he said in the interview with Bloomberg.
At the same time, the authorities are tightening their grip on cryptocurrency exchanges and the private issuers of digital coins. Recently, FXStreet reported that China launched investigations against top-managers of OKEx and Huobi, the two largest trading platforms in Asia. Another trading platform, TokenBetter, was also rumoured to be under investigation.
Also, the People’s Bank of China issued a draft proposal to prohibit private companies and individuals from selling and creating yuan-backed digital tokens and individuals. If the proposed legislation is approved, the authorities will have the power to forfeit any proceed from such sales.
Experts believe that the authorities have been implementing harsh measures to remove the competition ahead of the digital yuan launch.
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