Yesterday we reported that China was running small central bank digital currency (CBDC) experiments in Beijing and Shanghai, in addition to the two previous mass digital yuan pilots in Shenzhen and Suzhou. On top of these tests, yesterday applications closed for a second mass Shenzhen giveaway of 200 yuan ($31) to 100,000 people. Almost 1.9 million residents applied and the lottery winners can download the Digital RMB app from January 7.
But there are also reports of another two smaller scale experiments. Five locations were originally announced for the CBDC or eCNY testing, including Shenzhen, Suzhou, Xiongan New District, Chengdu and the future Winter Olympics. We reported yesterday that in Beijing district, a coffee shop is accepting digital yuan payments.
Trials are also underway on the Beijing metro as part of the 2022 Winter Olympics preparations. According to Beijing Daily, on December 29, figure skating world champion Shen Xue opened a digital yuan wallet and made purchases using a digital renminbi wearable device incorporated in ski gloves and bought a subway ticket. The trial includes a variety of wallets such as ultra-thin card wallets, badges, watches, bracelets and other wearable devices.
And today, in Shanghai state-run Xinhuanet reported that the Tongren Hospital’s canteen took a payment from a doctor who used a digital renminbi wallet card rather than a mobile phone. A stated aim was to address the ‘digital divide’ by not requiring a smart device. The hospital plans to pilot the CBDC for treatment payments, parking and other applications.
While the Chinese authorities have insisted that the eCNY is still undergoing internal testing, the scale is clearly escalating with five new trials unveiled in the ten days since Christmas. And the fact that foreigners will use it for the Winter Olympics, which starts in early February next year, implies that 2021 will likely see the production launch of the first CBDC deployed by a major economy. That said, the former head of the People’s Bank of China recently claimed that the eCNY is not a CBDC because it’s a liability of the commercial banks.