New Territory In Digital Yuan Studies

As China continues its digital yuan work, a local news site said the new pilot area for the digital yuan would be Hainan.


As China continues its digital yuan work, a local news site said the new pilot area for the digital yuan would be Hainan.

It was claimed that the Chinese island province of Hainan will be the pilot zone for the digital yuan from 12 to 25 April.

China's Hainan industrial and Commercial Bank branch, people's Bank of China's Haikou branch and Sansha municipality will run the digital yuan pilot, The Block reported in Chinese media. The Test, in particular, will be held on Yongxing Island in Sansha city to encourage the use of digital yuan. Participants will receive a discount of 99 yuan (124 Turkish lira) for every 100 yuan of purchases made on the island, including spending at supermarkets, hotels and restaurants.

The Hainan test was part of the second group of cities to pilot the central bank's digital currency. Other cities that had previously tested the digital yuan included Shanghai and Changsha. Among the first cities to test the digital currency were Shenzhen, Beijing, Suzhou and Chengdu.

The cities of Qingdao, Dalian and Xi'an are also expected to be in the regions where digital yuan trials will be held in the coming months as part of the second trial process. With its growing pilot work, China is increasingly moving closer to launching the digital yuan, which it began researching and developing six years ago.

China had reported on March 23 that six major state-owned banks had begun testing wallet services for the digital renminbi (RMB). It was announced that customers could apply to these banks to participate in the trial, while customers whose applications were approved had access to wallets connected to the central bank's digital RMB application. Agricultural Bank of China, Bank of China, Communication Bank of China, Construction Bank of China, Postal Savings Bank of China and industrial and Commercial Bank of China; six state-owned banks participated in the digital wallet test in China.

What is digital currency electronic payment?

DCEP (digital currency electronic payment) is a central bank digital currency (CBDC) project run by the people's Bank of China. It is based on a two-pronged monetary system. The first is CBDC, which is issued by the central bank for commercial banks, and the second is CBC, which is made available to the public by commercial banks. DCEP was designed as a digital version of the country's currency.

DCEP has a technology called Distributed Ledger Technology (DLT). In this way, it makes cash-like P2P (peer-to-peer) transactions possible without intermediaries, but gives the government some kind of central control.

The app is said to work like other digital wallets. By connecting it to their own bank accounts, users can swap RMB (Chinese yuan) for digital RMB, transfer it to others via phone number or QR code, or withdraw paper money from digital RMB accounts directly from an ATM. However, those testing the platform complain that the app is limited compared to Alipay or WeChat Pay.

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