China in a significant move launches a trial of digital yuan in four urban centres of the country for specific services even as the world grapples with containment of Covid. In recent months, China’s bank has stepped up its development of the e-RMB, which is set to be the first digital currency company operated by a major economy.
The major cities of Shenzhen, Suzhou and Chengdu, as well as the Xiong’an New Area, will witness use of digital currency for some services, according to state-run Xinhau News Agency.
State-media outlet China Daily said it had been formally adopted into the cities’ monetary systems, with some government employees and public servants to receive their salaries in the digital currency from May.
The three cities have a overall population of more than 38 million people. The Xiong’an New Area is a district and economic zone being developed near Beijing.
There is no response from the international community.Sina News said the currency would be used to subsidise transport in Suzhou, but in Xiong’an the trial primarily focused on food and retail.
According to local news reports the currency will be used to subsidise transport in Suzhou, while in Xiong’an the trial primarily focuses on food and retail. A screenshot purported to be of the app required and use the digital payment has been circulating since mid-April.
According to state-run China Daily, a statement by the People’s Bank of China (PBOC) said that the digital currency – known as the e-RMB – “will not be issued in large amounts” for public use in the short term and that the digital currency in circulation would “not lead to an inflation surge”.
Digital currency platforms are already widespread in China, namely Alipay, and WeChat Pay, owned by Tencent, but they do not replace existing currency.
Unlike decentralized cryptocurrencies, such as bitcoin, that allow users to transfer value with no central authority or third party involved, the government-backed digital currency is put under the centralized mechanism of the central bank and thus is as stable in value as its cash cousin,” the China Daily wrote in its editorial.
