Shenzhen Selects 50,000 Individuals to Participate in Digital Yuan Pilot Program

(Source: Zhihu)

The city of Shenzhen has selected 50,000 individuals to participate in its digital yuan “red packets” pilot program, according to the local government.

Shenzhen, a city in China’s southern Guangdong province, announced that it will distribute 10 million yuan ($1.49 million) in Digital Currency Electronic Payment (abbreviated as DCEP, also known as the Digital Yuan) to residents on Thursday. The beneficiaries will be selected in a lottery, and the money will be distributed accordingly in 50,000 digital red envelops containing 200 yuan each. The money can then be spent at any of 3,389 shops in Shenzhen’s Luohu district that have installed the digital currency payment system.

The program requires that applicants be located within the administrative area of Shenzhen in order to register. Registration can be conducted by using one’s mainland Chinese mobile phone number and second-generation resident ID card.

As of 8 a.m. on Sunday, a total of nearly 2 million individuals in Shenzhen had registered for the pilot program, according to Shenzhen Municipal Government.

The “red packets” program rules that red envelopes cannot be transferred to other people or redeemed into personal bank accounts. Digital red envelopes that have not been used at the date of expiration will be collected back by the digital RMB system.

This is the first time ordinary consumers have participated in such a large-scale test of the central bank’s digital currency. Previous tests have mainly been conducted among government bodies, financial agencies and private businesses.

“This is a new starting point,” said Xu Hongcai, deputy director of the Economic Policy Commission. “This means the money can be spent, transferred and circulated as payment.”

Although this test in Luohu district demonstrates that the digital currency has taken an important step forward, it is still mainly restricted to small payments for the time being. Furthermore, the test in Luohu district is still a trial, and it does not guarantee that the digital currency will be officially launched soon.

In August, China’s Ministry of Commerce released a statement claiming that the digital yuan pilot program would cover most Chinese cities and regions. The governing body announced that they “will carry out digital RMB pilot projects in the Beijing-Tianjin-Hebei region, the Yangtze River Delta, the Guangdong-Hong Kong-Macao Greater Bay Area, and in the central and western regions where conditions permit,” the statement said.

SEE ALSO: What You Need to Know About Chinese Central Government’s Digital Currency

In the same month, Shenzhen Municipal Financial Supervision and Administration Bureau announced that Shenzhen, as one of the four pilot cities approved by the PBOC, is conducting internal testing of digital currencies in an orderly manner, under the premise of ensuring safety and control.

According to Fan Yifei, the deputy governor of the People’s Bank of China (PBOC), a total of 113,300 private “digital currency wallets” and 8,859 corporate “digital currency wallets” had been opened as of August, and payment using the DCEP system had been tested in almost all fields related to people’s livelihoods, including paying water, gas and power bills, government services and transportation.