After a very successful September test run in Shenzhen, the People’s Bank of China is conducting another digital yuan lottery, this time in Suzhou.
The Shenzhen test acted as both a stress test and a marketing initiative for China’s central bank digital currency (CBDC). The City government gave away $1.5 million to 50,000 randomly selected citizens, who each received 200 yuan—about $30—usable at any of the 4,000 merchants who accept the digital yuan, formally known as Digital Currency/Electronic Payment.
According to a Nov. 21 report by local news outlet The Paper, China’s central bank extended its “red envelope” CBDC lottery program to the Suzhou district after successful completion in Shenzhen.
The Suzhou test will include important new features that did not factor into the Shenzhen trials, most notably the ability to pay while offline. Such transactions can be performed by touching the two devices involved while neither are connected to the internet.
And many of the merchants in the Suzhou area have already installed QR codes that allow them to accept payments in digital yuan. Winners will be required to download special wallets to receive their winnings. In the Shenzhen test, more than 95% downloaded the necessary digital wallet and spent with it.
Formally known as the digital currency/electronic payment (DC/EP) project, the first live test of China’s central bank digital currency (CBDC) began in April in four cities: Shenzhen, Chengdu, Suzhou, and Xiong’an. It was later extended to Beijing, Hong Kong, Macau, and Guangdong province. Early this month, Yi Gang, a governor of the people’s Bank of China, said nearly $300 million digital yuan has been spent in various pilot programs, Reuters reported.
The digital currency is said to have been ready for deployment since late September, although Yi said a full-scale rollout was not imminent, as a legal framework for the digital currency was not in place. When it does launch, acceptance of the digital yuan will be mandatory, a PBOC deputy governor revealed that month.
Whether the launch will really take very long is unclear. Most notably, China’s President Xi Jinping just pitched the development of CBDCs at the highest-possible profile international event, the G20 Leaders Summit on Nov. 21.
Despite giving a fairly short speech that covered everything from COVID-19 to multilateral trade agreements, Xi took time to call for the group to “discuss developing the standards and principles for central bank digital currencies with an open and accommodating attitude, and properly handle all types of risks and challenges while pushing collectively for the development of the international monetary system.”