China will begin trialing 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 subsidize 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. Xu Yuan, associate professor at Peking University’s national development research institute, told broadcaster CCTV that because cash transactions were offline and transaction data from existing payment platforms was scattered, the central bank was unable to monitor cash flow in real-time.
Progress on the digital currency was reportedly spurred on by Facebook’s announcement in June it intended to launch one itself. The sovereign digital currency, which will be pegged to the national currency, has been under development for some years but in August the bank said it was ‘almost ready.’ decline in cash usage is expected to continue amid the growing popularity of digital payment platforms and as people avoid physical contact during the coronavirus pandemic.
[Source: The Guardian]
