Shenzhen to give out 10 million yuan 'gift money' in digital RMB
Updated 16:34, 09-Oct-2020
Luohu District, Shenzhen, China. /VCG

Luohu District, Shenzhen, China. /VCG

Shenzhen said Thursday it is launching a pilot program with the Chinese central bank to distribute a total of 10 million yuan in digital RMB to the public to stimulate consumption and domestic demand as well as to conduct a routine test of the digital currency.

The pilot will be funded by Shenzhen's Luohu District, and the money will be distributed equally to 50,000 recipients through lottery. Residents can use the money at 3,389 designated merchants, including restaurants, supermarkets, gas stations, metro stations, department stores, and other businesses in Luohu District within next week.

It is the latest move to further expand pilot run of digital RMB in Guangdong-Hong Kong-Macao Greater Bay Area, following trials in four cities: Xiongan New Area in north China's Hebei Province, Shenzhen in south China's Guangdong Province, Suzhou in east China's Jiangsu Province and Chengdu in southwest China's Sichuan Province.

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It will also be tested during the 2022 Winter Olympics Games in Beijing, and will be expanded to other regions as appropriate.

China's four major state-run commercial banks – Bank of China, China Construction Bank, Industrial and Commercial Bank of China, and Agricultural Bank of China – are also reported to have started large-scale internal testing of a digital wallet app, moving a step closer to the official launch of the world's first sovereign digital currency.

Users in the trial can use the digital wallet to top up accounts, withdraw money, make payments, and transfer money after registering with their mobile phone number. The banks are also testing a scenario where users can transfer money without internet.

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Chinese ride-hailing giant Didi Chuxing is also partnering with the central bank over the digital currency plan. Didi, with more than 500 million users in the Chinese mainland, can leverage its efficient transport platform to test the digital currency.

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Didi's support of China's central bank virtual currency is a milestone

Food delivery giant Meituan Dianping, which hosts billions of dollars in daily transactions, is reported to have been in talks with the central bank on real-life uses for the digital currency.

China has become the first major economy to carry out a real-world test of an official digital currency after six years of exploring the idea. In a survey by Bank for International Settlements in 2019, over 80 percent of central banks were engaged in sovereign digital currency projects. China has begun to pilot the digital RMB, while the U.S. and European Central Bank are still exploring the development of digital currencies.