The People’s Bank of China announced yesterday (April 12) that six new cities began participating in trials for China’s digital RMB in 2020. Shanghai, Hainan, Changsha, Xi’an, Qingdao and Dalian joined the existing pilot areas of Shenzhen, Suzhou, Xiong’an, and Chengdu. The first digital currency trial began at the end of 2019, and, since then, over 200 million RMB ($30.4 million) worth of digital red envelopes have been distributed to citizens. The digital RMB is administered by China’s central bank, the People’s Bank of China.
In the pilot areas, digital RMB, or DCEP (digital currency electronic payment), can be used to pay for transport, water and electricity bills, government services, and at retailers who participate in the scheme. Earlier this year, ATMs began supporting China’s digital RMB trials for deposits and withdrawals. Digital RMB payments will also feature at the 2022 Winter Olympics.
Currently, the number and amount of transactions are relatively small, and there is no timetable for the official national launch of the digital RMB. Yet, China is far ahead of other countries in its creation of a Central Bank Digital Currency (CBDC). If China is successful in its efforts to scale up the digital RMB, it will be the first major economy to launch a CBDC and could be a global leader in forming international rules and standards in this sphere.
The People’s Bank is also investigating the potential of using the digital RMB for cross-border payments. Earlier this month, it announced it had started “technical testing” cross-border usage in Hong Kong. It has also been working with relevant officials in Thailand and the United Arab Emirates to better understand international payments using digital currency.