Sci-Tech

China sets up first digital yuan distributors

China has been developing its own digital currency, DCEP (Digital Currency Electronic Payment), colloquially known as the digital yuan, for years. Not a week has passed in which the media around the world have been talking about a new design decision, a new pilot, or a new partner for the MNBC adventure. Chinese. The country’s diplomatic and economic ambitions are also often highlighted in the context of increasing competition with the United States, whose trade dominates the dollar. At this point it is the turn of the ATMs to adapt to the new digital form that the country wants to give its currency. The Agricultural Bank of China is at the center of this new project, known for its involvement in digitization projects for digital yuan.

The launch of these digital kiosks is part of the third large-scale attempt by People’s Bank of China, the country’s central bank, with the digital yuan in Shenzhen city. The Chinese magazine Caijing reported last April that the four state commercial banks, including the Agricultural Bank of China, would be among the first DCEP pilot institutions. Today, six major banks are taking part in the testing of this new currency, proof that the pace for the development of the digital yuan continues to accelerate.

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China has so far conducted many pilot projects to test its central bank digital currency (MNBC). In Shenzhen, the country initiated a life size test in the form of a lottery on October 12, 2020 to assess the consumer behavior of citizens. This pilot project is designed to promote the digital yuan. It distributed a value of 200 renminbi (the Chinese currency, the base unit of which is the yuan) in digital yuan to applicants to observe how and at what expense they would spend it with ease. That lottery was then repeated in Suzhou last December, where JD.com, China’s second largest online retailer, allowed MNBC package winners to spend it by purchasing some of its items.

Today, the country is running a third pilot that has returned to the city where it all began: Shenzhen. As of January 1, the Futian District distributed 20 million yuan to its people. Small difference from the previous tests: the number of physical stores that accept payments in digital yuan has increased significantly, and the study now includes the function of depositing and withdrawing digital yuan. This new functionality is offered by the Landwirtschaftsbank and is easy to translate. An ATM, a mobile phone that contains the digital wallet, and distributes cash. China hopes familiarity with this feature will complement the increasing coverage of digital payments merchants. The number of vendors where the digital yuan can be spent has grown from 3,000 to 11,000 in the city since the first pilot in October. The director of the “Digital Yuan Innovation Lab” established in Shenzhen this year pointed out the various uses of the digital yuan. In addition to shopping malls, supermarkets or convenience services, the type of transaction that can be carried out with Chinese DCEP can also be low in frequency and scope. For example, to top up a subway card or to pay a phone bill.

Over time, private companies that customize and accept digital yuan payments directly on their online platforms have skyrocketed. However, these partners are dependent on user banks. As reported by Shenzhen News, Banque Agricole, Banque d’Épargne Postale and Banque des Communications can only connect to JD.com while others have other partners. At present, China’s Industrial and Commercial Bank (ICBC) has the most partners. These include, for example, Meituan Bike and Didi Chuxing. In the face of these banks, Banque Agricole is characterized by the fact that it offers its customers the option of depositing and withdrawing digital money at physical points.

This new dynamic of the digital yuan is intended to guide Shenzhen residents to adapt to the digitization of cash, which China aims to end in the long term. It could also allow people to more deeply explore and experience the transformation of banking services that is happening at breakneck speed across the country.

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