SHANGHAI, Oct 9 (Reuters) - China's central bank is issuing
10 million yuan ($1.5 million) worth of digital currency to
50,000 randomly selected consumers in what some see as the
country's first public test of the digital yuan payment system.
The People's Bank of China's (PBOC) campaign comes as
central banks worldwide race to issue digital currencies to
modernise payments systems, as well as to fend off potential
competition from privately issued cryptocurrencies.
Starting Friday, any individuals in China's southern city of
Shenzhen can apply to join the program through the country's Big
Four banks. But only some will be awarded a 200-yuan "red
envelope" via a lottery, according to the local government and
The winners can use the digital currency in 3,389 retail
outlets in Shenzhen including Sinopec gas stations, Walmart
stores, CR Vanguard malls and Shangri-La hotels.
"This is the first public test of digital yuan, and has huge
significance," wrote Dong Ximiao, chief analyst at Merchants
Union Consumer Finance Co Ltd.
He suggested the PBOC expand pilot schemes to more Chinese
cities and officially launch the digital currency as soon as
possible to meet public needs.
PBOC said in April it was conducting tests of a digital yuan
payment system in four cities across China, including Shenzhen,
and intends to pilot the system at future Winter Olympics
China is seeking to win a first-mover advantage in its
efforts to develop a digital currency, Japan's top financial
diplomat Kenji Okamura said on Thursday.
On Friday, a group of seven major central banks including
the U.S. Federal Reserve set out how a digital currency might
look, in a bid to catch up with China's "trail blazing" and
leapfrog private projects like Facebook Inc's Libra
According to the local government, Shenzhen's digital "red
envelope" campaign is a normal test of digital yuan.
Anyone in Shenzhen can apply to join the lottery until
Monday, while winners will be awarded the red envelope on Oct.
12 after they download an app for the digital currency and
register for a digital wallet.
China's digital ambitions are not limited to the domestic
A commentary published by PBOC last month said China needs
to become the first nation to issue a digital currency in its
push to internationalise the yuan and reduce its dependence on
the global dollar payment system.
But Flex Yang, founder and CEO of crypto finance firm Babel
Finance, said technology alone doesn't automatically earn
digital yuan global acceptance.
It depends on whether other countries are willing to accept
the digital yuan payment system. It's a political issue, not a
technological one. We look forward to its future development as
it is still in the early stage.
($1 = 6.7034 Chinese yuan renminbi)
(Reporting by Samuel Shen and Andrew Galbraith; Editing by Hugh