50,000 buyers give Chinese digital yuan its biggest test to date by Bloomberg

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© Bloomberg. President Xi Jinping’s speech in Shenzhen airs in a Hong Kong store on October 14.

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(Bloomberg) – This week, tens of thousands of Chinese people spent digital yuan at Walmart (NYSE :), gas stations and convenience stores in southern Shenzhen tech hub. The experiment – unprecedented in scope and size – went off without a hitch, propelling the world‘s No.2 economy to the forefront of a race to develop virtual money. Real is the largest to date in terms of users and money involved since China’s central bank launched tests of its digital currency in a handful of cities in April. The Shenzhen government distributed 10 million yuan ($ 1.5 million) of this new money – dubbed Digital Currency Electronic Payment, or DCEP – to 50,000 randomly selected citizens through raffles on the app. wallet of currency. Each winner receives 200 yuan to spend at more than 3,000 outlets spread across one of the city’s most vibrant areas. The giveaway, coming the week of President Xi Jinping’s visit to Shenzhen, marks the biggest milestone in Beijing’s ambition to monitor and control its rapidly digitized economy and potentially strengthen the yuan’s status as a global currency. A digital yuan will have broader implications for an economy already comfortable with cashless and mobile transactions, an arena now largely controlled by Ali Baba (NYSE 🙂 Group Holding Ltd., backed by Alipay and Tencent Holdings (OTC 🙂 Ltd.’s WeChat.

The trial shows that “they are ready for the full launch of its digital currency very soon,” said Charles d´Haussy, who heads the Hong Kong office of blockchain engineering firm ConsenSys.

China is increasingly a cashless society – pancake vendors in small towns preferring digital wallets to rustling to make change – but the DCEP is designed to prevent the country from ever having to adopt a standard, like the one in the dollar, which is controlled. by others. Designed to replace cash over time, it will also help Chinese regulators better understand the country’s money supply.

Users need to create a dedicated account for DCEP transactions using their local mobile phone numbers and download a wallet app linked to one of China’s Big Four State Banks. Merchants and buyers can then scan each other’s QR code generated by the app for transactions. The app shows a portrait of Mao Zedong on a page where users check their balances, similar to the physical 100 yuan banknote.

“I will consider making this my first option over WeChat or Alipay, since it is state-backed,” said Wang Jinchao, a 27-year-old user growth manager with a startup company. Shenzhen online learning, which was among the least 3% of the lucky applicants to win the DCEP document.

Along with testing with end users, the central bank is partnering with tech giants like Meituan and Didi Chuxing to explore applications for services like food delivery and hail that could drive acceptance.

Lin Song, a 42-year-old telecommunications engineer in Shenzhen, spent the 200 yuan DCEP he earned to go to a gas station. It’s as easy as using any other payment method, he says. “It’s really which platform has the biggest promotions and connects more merchants so that I decide which one to stick with,” he says.

© 2020 Bloomberg L.P.

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