Recipients of China’s DCEP Airdrop Skeptical of Digital Yuan
Following the conclusion of China’s airdropped digital currency electronic payment (DCEP), the country’s central bank digital currency (CBDC), to Shenzhen residents, some of the recipients gave unimpressed reviews about the DCEP. Meanwhile, authorities stated that the airdrop campaign was a success.
Digital Yuan Similar to Existing Payment Options
According to Reuters on Monday (October 19, 2020), recipients of the airdropped digital yuan in Shenzhen noted that the DCEP was no different from the existing online payment platforms like Wechat pay and Alipay.
As part of efforts to test and promote the DCEP, the Shenzhen government earlier in October conducted a lottery that saw the distribution of 10 million yuan (~$1.5 million) worth of digital currency to residents. About two million people applied for the giveaway but 50,000 lucky winners were selected and each got “red envelopes” containing 200 digital yuan.
The winners would then proceed to download the DCEP app to receive the digital yuan which can be spent at over 3,300 merchants in the Luohu District of Shenzhen. As reported by BTCManager, winners were already spending their digital yuan at local retail outlets. Furthermore, recipients had between October 12 and 18 to spend their free “coins”.
With the giveaway and spending time frame ended, some of the recipients did not see anything outstanding about the DCEP. One shopper told Reuters that the digital yuan was “less convenient than existing options”, adding that there were no intentions to use the DCEP unless it was freely given.
There were speculations that the government planned to use DCEP to water down the Tencent’s and Alibaba’s domiance in China’s electronic payment market. For this to work, the government would have to work on making its digital yuan stand out.
Commenting on China’s trial efforts was a senior economist as PwC China, G. Bin Zhao, who said:
“It’s especially important to offer convenience and other benefits to promote the use of digital yuan. For digital yuan to be popularly accepted, banks and other institutions need to invest heavily in applications, marketing and education.”
Shenzhen Authorities Record Successful CBDC Trial
However, observers opined that Beijing’s CBDC could weaken the U.S. dollar’s hegemony if the digital yuan is used for international payments. Earlier reports stated that China is working on being the first country to release a CBDC to challenge the dollar’s dominance.
The Chief China economist at ANZ, Raymond Yeung, also noted that China’s DCEP would allow authorities to monitor currency circulation and curb money laundering.
Meanwhile, Shenzhen authorities announced that the digital RMB red packet program was successful. According to the report, 47,573 out of the 50,000 winners received and spent their free coins.
Furthermore, there was a total of 62,788 transactions which amounted to 8.8 million yuan ($1.3 million). Some of the recipients of the free coins also went ahead to top-up their digital wallets. The recharge totaled 901,000 ($134,000).