Companies in selected regions have joined the trial to test China’s first digital version of the renminbi issued by the central bank. PIXABAY
Pilot programmes of China’s central bank digital currency will soon start in selected regions, including Xiongan New Area in Hebei province, focusing on consumption scenarios such as catering and retail sales, media reports said.
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 the renminbi issued by the People’s Bank of China (PBoC), the central bank, said the reports.
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 Ltd, China Construction Bank Corp, Agricultural Bank of China Ltd and Industrial and Commercial Bank of China Ltd – were asked to install “digital wallets “on their cellphones last month, the local government said in a notice.
A part of their salaries will be paid in central bank digital currency starting from this month, it said.
A report from Chengdu-based Sichuan Newsnet Media (Group) Co Ltd said 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 last 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 National Institution for Finance and Development researcher Dong Ximiao.
The digital renminbi will replace part of cash in the future but will not eliminate all banknotes soon, said Dong. “Paying with cash and digital currency will coexist for a long time.”
PBoC digital currency research institute head Mu Changchun previously said payments via the upcoming Chinese sovereign digital currency could be contactless and the transaction can be achieved when two mobile phones with electronic wallets get close to each other.
Different from the existing electronic payment methods, such as Alipay.com Co Ltd and WeChat Pay that rely on the internet, digital currency can be exchanged offline when two cellphones get close to each other, said Mu.
China could be one of the leading countries in the world to have a retail-based central bank digital currency, said analysts.
The PBoC started research on its digital legal tender in 2014. The State Council approved the PBoC’s digital currency development programme at the end of 2017, jointly with some qualified commercial banks and institutions. The central bank called the new money “digital currency and electronic payment”.
Peng Wensheng, chief economist with state-owned brokerage Everbright Securities Co Ltd, said that once the regular delivery channels of the central bank digital currency are opened, more people will take the new money, and it may compete with existing electronic payment tools.
“If businesses do not need to pay any fee for using the digital currency, it will take some of the market share of Alipay and WeChat Pay. In the future, digital money issued by the central bank is likely to compete and compliment the private sector’s electronic payment platforms,” said Peng.
The digital currency trials now are being conducted in a “closed environment” and not connected to the existing sovereign currency issuance and circulation system, said a senior official from the PBoC’s institute, who did not want to be identified.
CHINA DAILY/ASIA NEWS NETWORK
