Digital currency system has been formally adopted into the cities monetary system by issuing salaries of the government employees and public servants complete free of cash from May, says Chinese national media
China will begin trialing payments in its new digital currency in four major cities from next week, according to domestic media.
China is going onto the trial process from next week to test its new digital currency system at the four major cities, reported by Chinese national 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, reports The Guardian.
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.
Digital currency system has been formally adopted into the cities monetary system by issuing salaries of the government employees and public servants complete free of cash from May, reported China Daily.
The currency would be used for different purposes in different cities. As Sina News has reported, it 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 denied such claim. While McDonald's hasn't given any statement yet.
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 Chinese central bank was struggling to monitor the cash flow in realtime because the transaction and existing data are very scattered.
"Although there is little change from the perspective of user use, from the perspective of central bank supervision, future forms of finance, payment, business and social governance etc, this is the biggest thing ever."
On 17 April, the digital currency research institute at the People's Bank of China, which is developing the system, said the research and development of a digital renminbi was "advancing steadily" and top-level design, functional research and development, and debugging had largely been completed, according to a CCTV report.
Meanwhile, Facebook has also announced to launch their own digital currency in coming June.
The Chinese digital currency has been under development for years but the government has changed its statement quite a few times about its launch. Like in August 2019, Chinese national Bank announced it be "almost ready"; but changed its statement in the following months. As the bank's governor, Yi Gang, said there was no timetable for release.
"A sovereign digital currency provides a functional alternative to the dollar settlement system and blunts the impact of any sanctions or threats of exclusion both at a country and company level," last week's China Daily report said.
"It may also facilitate integration into globally traded currency markets with a reduced risk of politically inspired disruption."
A 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