Tests for China’s Central Bank Digital Currency (CBDC) have gone on for months, and the country appears to be hitting one milestone after another. Although it hasn’t launched yet, the digital yuan from China is seeing significant adoption nonetheless.
The Year of Pilot Programs
According to a recent Reuters report, about 2 billion yuan ($300 million) of the CBDC has now been spent. The report cited a speech from Yi Gang, the governor of the People’s Bank of China (PBOC), at Hong Kong’s FinTech Week conference.
Yi reportedly confirmed the number, explaining that the digital yuan had also moved across four million separate transactions so far. The transactions cover about 12,000 payment scenarios, with all of them coming through pilot programs.
The initiative is part of China’s mission to digitize its currency and leverage blockchain technology to bolster its economy. Citing the reason for the country’s expedited tests, Yi explained that the coronavirus had forced an increase in demand for contactless payment methods. The Peoples’ Bank would like to continue rapidly along that path, ensuring that they can combine security with convenience for payment efficiency.
So far, China has spent a significant chunk of 2020 on tests for the digital yuan. The first pilot program was reported to have launched in April, with the Peoples’ Bank using the asset across four regions – Shenzhen, Xiogan, Chengdu, and Suzhou. The Bank eventually expanded these tests to five other cities, with the Wall Street Journal explaining that provinces including Guangzhou, Macau, and the Hong Kong Greater Bay Area had joined the fold.
Tests Ramp Up as Rollout Nears
However, the past two months have seen some of the largest scale testing programs. Last month, local news source Sina Finance reported that the Luohu District in Shenzhen had gotten $1.5 million worth of the digital yuan and planned to issue them to citizens as part of a promotional giveaway.
Per the report, the pilot saw the government distribute the digital yuan units to 50,000 recipients via a lottery. Successful applicants would get 200 renminbi worth of the asset, and they would be able to spend it across any of the 3,500 plus merchants in the region. The program lasted between October 12 and 18, with the government committing to taking back any unused tokens.
A few days later, Economic Information Daily reported that gas stations in Shenzhen had begun accepting the digital yuan as part of an accelerated testing program. The news medium confirmed that 11 gas stations could receive the asset, with more set to join in the coming weeks.
The initiative was the brainchild of Guangdong Petroleum, a state-owned energy company. The firm had gotten a license for the initiative, fitting all participating gas stations with barcode readers that allowed citizens to make payments.
Guangdong Petroleum added that it planned to extend the program to 110 pother self-operated gas stations before the end of October.
Like Guangdong Petroleum, PBOC governor Yi expressed optimism about the digital yuan project. He confirmed that the tests had gone smoothly in his speech, although the initiative is still in its early stages. The Peoples’ Bank has partnered with several of China’s top tech and financial services firms to ensure that an eventual rollout happens without a hitch.