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Friday, December 4, 2020

Shenzhen has a new plan for promoting digital yuan

  • China continues its CBDC tests in various regions across the country.
  • One of the new areas where the coin will be tested is Shenzhen, where users will randomly receive CBDC grants.
  • The country plans to issue 10 million yuan in crypto, and allow users to spend it with designated merchants.

As China continues down the path to issuing its own CBDC across the country, some of its regions are already prepared to help contribute in any way they can. Shenzhen, for example, recently revealed a new program that will see it issue 10 million yuan ($1.47 million) worth of CBDC, in order to promote the new form of currency.

What is the program all about?

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The move was, of course, approved by the country’s central bank, and it will be conducted in collaboration with it. The plan is to issue the coin in 50,000 ‘red envelopes.’ Each of them will be worth 200 yuan, and they will be granted to citizens who are randomly selected.

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Residents can already apply for participation, and they need to do it quickly, as the draw will be complete by October 12th, and the winners will be notified on the same day. All they need to do after that is download an app that will allow them to receive the envelopes.

As for what they can do with the money — they can spend it in designated businesses within Shenzhen’s Luohu district. A number of businesses in this district accept this method of payment, and the lucky winners can use the funds as payment for goods and services.

Why is China doing this?

The program has two goals — to serve as an innovative way to increase demand and consumption, as well as a way to continue the tests regarding digital yuan, and contribute to the currency’s research and development.

After all, China did say that it plans to pilot the coin in several regions across the country, back in August. So far, the country has already managed to complete quite a few aspects of the coin and the new payment system, including standard-setting, top-level design, R&D of its functions, and even joint tests.

The country doesn’t want to leave any stone unturned, however, and so it is proceeding with the tests in search of potential issues, and at the same time, it is giving its people the opportunity to get used to the coin, while it also seeks to help the economy recover by giving its users an interesting new way to spend money.

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