China’s Latest Digital Renminbi Trial Targets 500k People Plus Cross Border Payments
The Chinese government is conducting fresh digital yuan tests in six new provinces including Shanghai, Hainan, Changsha, Xi’an, Qingdao, and Dalian. The government has increased the scope of this latest DCEP trial from the previous 50,000 to 500,000 users. The cross border payments capability of the central bank digital currency (CBDC) will also be tested, according to reports on April 14, 2021.
China Expands Scope of DCEP Tests
Building upon the success of previous digital yuan tests, the Chinese government is putting preparations in top gear to test its central bank digital currency (CBDC) in six more regions, expanding the trials to a total of 11 provinces so far.
While previous digital yuan tests only focused on 50,000 participants, the latest trial will target 500,000 people and Li Bin, director of the People’s Bank of China’s Macro-Prudential Management Bureau has hinted that the latest trials are aimed at testing the stability, safety, and control of the digital yuan before it finally goes live, even though there is still no specific launch date.
In his words:
“The digital yuan pilot test adheres to the principles of stability, safety, and control, and focuses on small transactions from invited whitelisted users. At present, the number of participants, the number of transactions, and the amount of net exchange are still relatively small. During the pilot process, all parties have relatively high interest in digital renminbi, and users in the pilot areas are relatively motivated.”
Digital Yuan for Cross Border Payments
In addition to carrying out the digital yuan test in 11 regions in the country, the cross-border payments capabilities of DCEP will be specifically tested in the Luohu district of Shenzhen, the location where the first trials were conducted in October 2020.
DCEP is an accepted payment option at 30,000 stores in the Shenzhen area and users will enjoy special discounts when they pay with it, as the government has set aside 10 million yuan ($1.5 million) for this purpose, to encourage active usage of the CBDC.
Notably, the digital yuan has some advantages over existing digital payment methods in the country such as WeChat Pay and Alipay. Merchants are only allowed to accept either Alipay or WeChat and not both. However, DCEP will be accepted by all electronic payments-supported merchants across China.
And on top of that, holders of the digital yuan who do not have smartphones can still make payments via the dedicated hardware wallet and there’s also a dual offline mode for merchants and users who do not have internet access.
China is way ahead of the U.S. and several other nations in the development of a sovereign digital currency. The PBOC has made it clear that the digital yuan is designed to function as a solid backup to existing electronic payments systems in the country.