The People’s Bank of China announced that on October 12 it begins the process of delivering Yuan Digital gifts to the citizens of Shenzhen. It is a pilot plan in which the traditional “red envelopes” move to a new stage, characterized by Blockchain technology.
According to a report published by the Sina.com.cn medium, all citizens of the aforementioned town may opt for the gift of the State. However, a selection process will be carried out, in which 50,000 people will receive the souvenir from the authorities.
It should be noted that the “red envelopes” are a tradition of gift money in China on special occasions (holidays, anniversaries, among others). The amount of money for delivery in Digital Yuan, is 200 yuan per person, distributed in 10 million red envelopes. This amount is equivalent to $ 1.5 million US dollars.
Yuan Digital delivery will take place in pilot mode
The nature of this gift to the citizens of Shenzhen is that it is a pilot scheme to test acceptance of the CBDC. As has already been widely reported on CryptoTrend, The People’s Republic of China, has been working meticulously for years in preparing its Yuan in digital version.
The delivery of gift vouchers or red envelopes, in Yuan Digital will be complemented with their acceptance in a network of stores. Consequently, citizens who receive the award will be able to spend it in some 3,389 commercial establishments.
According to the CoinDesk news portal, the fact that a pilot plan of this magnitude has been launched indicates that the Yuan in cryptocurrency version is already close to being officially launched by Beijing.
The report adds that the initiative, carried out by the people’s bank and the Shenzhen regional government, has other strategic objectives. One of them is “promote the construction of the Guangdong-Hong Kong-Macao Greater Bay Area to stimulate local consumption”.
Other Renminbi tests in digital version
It should be noted that this delivery of gifts in Yuan Digital is not the first test that has been carried out on this CBDC. Recently, the pilot plans have been implemented internally in Shenzhen, Suzhou, Xiongan, Chengdu. Likewise, tests are being prepared in future scenarios during the Winter Olympic Games.
As the Chinese authorities have stated on various occasions, this CBDC has attributes and functions similar to those of paper money. In this sense, in the future it is expected that it can be deposited in bank accounts, Alipay and WeChat wallets.
Despite the fact that the Chinese government has been working on this digital currency for a period of five years, there are still doubts in some sectors. One of them is the analyst Huang Yiping, for whom in-depth observation is necessary to assess the impact on the digital financial landscape.
Recently, CryptoTendencia reported that, so far, more than 3.13 million transactions have been made with the Digital Yuan. In addition, there are some 122,000 wallets that have been created in the midst of pilot programs to store, send and receive this digital currency denomination.
A coin that generates fear and expectation
The preparation of this CBDC by the authorities of the Asian nation has been loaded with rumors due to the secrecy in which it has been developed in these five years.
Many media in that country have announced with great fanfare that the currency that will overthrow the dollar is being born. On the other hand, their western counterparts have made alarming publications about the supposed “Danger posed by the Digital Yuan for democracy«.
Regardless of the tilt of the balance between different opinions on this CBDC, one thing is for sure, many countries are working on similar projects.
One of the most popular, so far, is the project Euro Digital, which is being hastily prepared by the European Union. Other Asian nations, such as South Korea and Japan, have raised concerns regarding the trade boost China could enjoy with such an advanced payment method.
There is no official release date
The mystery related to the official entry into circulation of the Digital Yuan is still latent. The authorities have been silent to the questions. The few information have come from “internal sources” of some media.
According to the People’s Bank of China, as already said above, in the Winter Olympics (2022) it will be used in Digital Yuan. However, it is ambiguous information, since there is no certainty if it will be officially or a new pilot test on a larger scale.
Another aspect that should not be overlooked is that the boost that, in theory, Beijing would have in economic terms with this CBDC, would increase tensions with the United States.
As is known, there is a “trade war” between the two countries. However, China, technologically, seems to have left the North American giant behind. For this reason, it would not be unreasonable for new sanctions to take place, this time against the new digital version of the Yuan..
An uncomplicated transition
Another essential aspect related to the Digital Yuan is that its application and coupling among the population could be relatively normal. Currently, the citizens of the communist nation enjoy a great technological capacity and payments through mobile phones are common.
In this sense, in large cities, the use of cash has been losing ground in recent years. Currently, with the measures related to the Covid-19 pandemic, people fear contact payment, which has given a greater boost to payments through cell phones.
Once this transition is made, the government of the nation and the Communist Party, will have practically total control of transactions. The latter, Alexander Badenheim, of the Konrad Adenauer Stiftung Foundation, recently quoted on the DW portal.
Data to take into consideration
- Requests for the red envelopes began on October 9. The delivery of the content in Yuan Digital will be made to 50 thousand citizens.
- Between October 12 and 18, they can be spent in 3,389 shops in the city, including gas stations, supermarket, transportation and others.
- The initiative to deliver 10 million red envelopes with 200 yuan to 50 thousand citizens is equivalent to $ 1.5 million US dollars.
- The frequency of pilot plans in different cities of the country can be considered as an indication that the launch of the Chinese CBDC is near.
- According to the People’s Bank of China, by the Winter Olympics in 2022, the Digital Yuan will be widely used.