The People’s Bank of China and a Shenzhen district will provide 10 million digital yuan (worth about the US $ 1.5 million) as “red envelope” gifts to citizens.
This initiative is presented as yet another pilot of the digital currency in development; it has been in testing with commercial entities and state banks during this year. According to a report by Sina.com.cn, in the pilot, 50,000 candidates will be selected to each receive 200 digital yuan (it would be the equivalent of about $30).
Digital yuan to test in Shenzhen
Anyone living in Shenzhen can apply for the gift starting today, October 9. This amount can be spent in 3,389 stores that are configured to carry out transactions in the digital currency.
By calling them “red envelopes” they are appealing to a metaphor. For the Chinese, red envelopes are a culture. This is a traditional way of giving cash in that country on holidays or for special occasions such as weddings.
This same week, the Chinese government reported that it has already used digital yuan “red envelopes” to reward some 5,000 medical workers who are actively fighting the coronavirus pandemic.
The pilot is being assisted by the central bank in partnership with Shenzhen’s Luohu District, which is funding the effort. This test is one more demonstration that the digital yuan is coming soon.
Details revealed by the central bank representative shows that China’s digital yuan, officially known as Digital Currency Electronic Payment (DC / EP), is very close to its official launch as China began researching digital currencies in 2014, far ahead of other major world economies, among them, there is the United States and the European Union, which have only recently started their initiatives.
Last week, the European Central Bank published a full report on the digital euro. In the document, he explained that you need to be prepared to issue a digital currency when the need arises. The United States Federal Reserve has also been researching digital currencies along with several regional federal banks.
The first tests of this digital yuan were conducted in conjunction with large companies such as DiDi (the Chinese version of Uber) and Meituan Dianping, a food delivery platform with more than 600 million users. McDonald’s and Starbucks also make the list.
Also, the central bank clarified a few weeks ago that the tests of the digital Yuan were only being conducted with small transactions. The statements offered were intended to disprove rumors of the purchase of a house and other higher-volume deals around the CBDC.
By: Jenson Nuñez.