digital currency

China Holds Digital Yuan Giveaway for Shenzhen Residents

China’s on a quest to dethrone $$$ as the world’s reserve currency
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Getty/Bingfeng Wu

· less than 3 min read

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China’s quest to dethrone $$$ as the world’s reserve currency will rely on digital yuan denominations.

The People’s Bank of China, which is piloting the Digital Currency Electronic Payment (DC/EP), recently said it’s processed more than 1.1 billion yuan (over $160 million) across 3.1+ million transactions. And since trials began earlier this year, the PBOC has disbursed over 113,000 personal digital wallets and 8,000+ corporate ones.

Growth phase

On Friday, Chinese officials announced a giveaway of 10 million digital yuan (~$1.5 million) to 50,000 Shenzhen residents. The lucky winners received access to the Digital RMB app and could spend the money at over 3,000 participating shops.

Immediate reactions: 1) Nice user acquisition strategy you got there 2) Choosing the bustling tech hub of Shenzhen for scaled-up DC/EP trials probably wasn’t coincidental.

Rest of world = jelly

If China’s on second base, others are just stepping up to the plate.

Yesterday, the G20 said it’s working with the IMF, World Bank, and Bank for International Settlements to create guidance for central bank digital currencies (CBDCs). As the international f’nance dream team studies stablecoins and the like, countries are considering their own projects.

  • For example: Japan will start CBDC trials at some point next year.

And Libra, the Facebook nation-state’s stab at stablecoins, faces formidable regulatory resistance. FB has pared down Libra launch plans, but it wasn’t enough. G7 leaders say they’ll oppose the launch of the coin until it’s properly regulated.

Back to DC/EP—it could be many things wrapped in one:

  • A tech-enabled scheme to wrest financial control from the West, and, potentially, Alibaba and Tencent.
  • A grim reaper for cash.
  • A tool to police financial transactions and monitor/surveil economic activity (DC/EP ≠ cryptocurrency).
  • A proof of concept for the rest of the world.

But none of that happens overnight. DC/EP pilots are scheduled to run through 2022, and by then, other countries could be launching their own digital payment rails.

Keep up with the innovative tech transforming business

Tech Brew keeps business leaders up-to-date on the latest innovations, automation advances, policy shifts, and more, so they can make informed decisions about tech.