China Digital Currency
Central banks have had a busy pandemic. Along with injecting vast amounts of money into the financial system, they have cleaned vast amounts of it—literally. From America to South Korea, central banks have quarantined and disinfected potentially contaminated banknotes. This hassle should make them all the more interested in a digital-currency pilot now under way in China. If successful, it could change how central banks manage both liquidity and physical cash.
The e-RMB has reportedly been adopted into the monetary systems of several cities.
China will begin trialling payments in its new digital currency in four major cities from next week, according to domestic media.
In recent months, China’s central bank has stepped up its development of the e-RMB, which is set to be the first digital currency operated by a major economy.
It has reportedly begun trials in several cities, including Shenzhen, Suzhou, Chengdu, as well as a new area south of Beijing, Xiong’an, and areas that will host some of the events for the 2022 Beijing Winter Olympics.
State-media outlet China Daily said it had been formally adopted into the cities’ monetary systems, with some government employees and public servants to receive their salaries in the digital currency from May.
Sina News said the currency would be used to subsidise transport in Suzhou, but in Xiong’an the trial primarily focused on food and retail.
A screenshot purported to be of the app required to store and use the digital currency has been circulating since mid-April.
Some reports also claim businesses including McDonald’s and Starbucks have agreed to be part of the trial, however in a statement Starbucks told the Guardian it was not a participant. McDonald’s been contacted for comment.
Digital payment platforms are already widespread in China, namely Alipay, owned by Alibaba’s Ant Financial, and WeChat Pay, owned by Tencent, but they do not replace existing currency.