Digital Yuan (DCEP)

National cryptocurrencies

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2023

Digital yuan became available for payment for the first time not only to the Chinese

On December 7, 2023, the Monetary Credit Authority of Singapore (MAS) announced an expansion of cooperation with China in digital finance and capital markets. We are talking, in particular, about the use of the digital yuan (e-CNY) to pay for certain services in the territories of both states.

The MAS agency, which serves as the central bank and public administration of financial regulation in Singapore, and the People's Bank of China (PBCDCI) signed a memorandum of understanding in 2020. As part of this agreement, the parties are embarking on a project that will allow tourists from both countries to use e-CNY to make transactions for small amounts. This is expected to "enhance the convenience for travellers to shop while travelling abroad." The initiative will promote digital yuan penetration in trade and other high turnover areas.

Singapore Monetary Authority (MAS) expands digital yuan collaboration with China

The new cooperation agreement [between China and Singapore] represents a great opportunity for cross-border use of the digital yuan in the retail sector, says Richard Turrin, an independent financial technology consultant.

e-CNY adoption in the Chinese market is accelerating. According to estimates, the total volume of transactions in digital yuan in June 2023 increased to 950 million yuan (approximately $133 million at the exchange rate as of December 9, 2023). At the same time, the total amount of such payments since the emergence of e-CNY reached 1.8 trillion yuan (approximately $252 billion), compared with 100 billion yuan in August 2022. As of the end of 2022, about 5.6 million Chinese traders in 26 pilot cities have registered to participate in the digital yuan program. Beijing is also experimenting with e-CNY applications outside mainland China.^[1]

China opens technology park to develop digital yuan

On October 11, 2023, China opened an industrial park whose task is to develop the digital yuan ecosystem. We are talking about the digital currency of the central bank (CBDC) - e-CNY. The site is located in the Luohu area of ​ ​ Shenzhen in the southeast of the PRC.

China's currency regulator says the digital yuan's "programmable features" could help improve the effectiveness of monetary policy instruments. For CBDC, in particular, you can define a validity period or limit the scope of use. At the same time, cross-border payments based on e-CNY can make transactions safer and more convenient.

China has opened an industrial park whose task is to develop the ecosystem of the digital yuan

At the time of opening, nine residents operate in the technology park for the development of the digital yuan, including Hengbao and Wuhan Tianyu Information, which issue payment cards, as well as payment operator Lakala Payment. According to reports, the local government has announced 10 initiatives to stimulate the development of the digital yuan ecosystem, which include specialized payment solutions and smart contracts. The People's Bank of China intends to investigate the effect of the introduction of e-CNY in order to improve the macroeconomic situation in the country.

As of the end of June 2023, the total volume of transactions using e-CNY reached 1.8 trillion yuan (approximately $246.24 billion at the exchange rate as of October 16, 2023). For comparison: in August 2022, the total size of such operations was estimated at "more than 100 billion yuan." As the head of the central bank of China Yi Gang noted, by the end of June 2023, the volume of e-CNY in circulation reached 16.5 billion yuan (approximately $2.26 billion). The number of transactions in electronic yuan reached 950 million, while 120 million wallets were opened. Thus, China is one of the world leaders in terms of introducing the central bank's digital currency.^[2]

Civil servants of the first city in China begin to receive all salaries in digital yuan

Civil servants in the Chinese city of Changshu will receive full wages in the central bank's digital currency (CBDC) from May 2023.

2021

Digital yuan began to be used for tax payments

On December 13, 2021, the Chinese authorities approved as part of an experiment the use of the digital yuan to make tax payments, the largest Chinese commercial bank Industrial and Commercial Bank of China (ICBC) said. The experiment is being conducted in Hainan province with the participation of the Central Bank of China, ICBC Bank and the regional tax service. The purpose of this experiment is to expand the scope of use of the digital yuan.

Digital yuan began to be used for tax payments

In order to carefully meet the requirements of the Hainan Regional Experiment to promote the digital yuan and further deepen the application of various payment scenarios. Hainan ICBC actively interacts with the provincial government, the tax office and the Haikou Central Branch of the People's Bank of China. The business of paying taxes in yuan took a leading position in the country. This experiment took just one month from the start of the demand project to official production, reflecting the high quality of ICBC's work, and was praised by the Chinese government and regulators.

On December 9, 2021, at the launch ceremony of the Digital Agreement on Tax Payments in Yuan organized by the Haikou Central Branch of the People's Bank of China and the Bureau of Taxation of Hainan Province of the State Tax Office, Hainan ICBC demonstrated the signing of a digital agreement on tax payments in Yuan and deductions in place, successfully serving customers.

The Chinese commercial bank paid ¥340 thousand ($53 thousand) taxes and was the first to complete a tripartite agreement on digital tax deductions in yuan. The successful implementation of this business provides taxpayers and payers with new ways to pay taxes and fees, further enriches the application scenarios of the digital yuan and marks a major innovative breakthrough in the application and promotion of the digital yuan in Hainan, which is important to help transform the digital economy of the Hainan Free Trade Port.^[3]

Start accepting digital yuan on the JD.com platform

In November 2021, online retailer JD.com first began accepting the Chinese digital yuan to pay on its platform. While the Chinese digital currency, e-CNY, is not officially distributed across China, the internet retailer's move to embrace it during the country's largest shopping event (bachelor's day) underscores the Chinese central bank's push to try it out in a wide-ranging environment. Read more here.

Created 10 million corporate accounts

In November 2021, the PBOC of China announced that the number of users of the digital yuan had grown to 140 million people, while 10 million corporate accounts were created.

E-yuan transactions reached 62 billion yuan ($9.7 billion) in tests conducted in about a dozen regions, Mu Changchun, head of the PBOC Digital Currency Institute, said at the Hong Kong Fintech Week conference.

The volume of transactions amounted to 150 million.

China unveils e-CNY digital yuan document

On July 19, 2021, it became known that China submitted a document on the digital yuan e-CNY.

The digital yuan e-CNY has all the basic functions of money, its issue and circulation are identical to the physical yuan, but its value is transmitted digitally.

The PBOC associates the development of the e-CNY tool with the fact that as digitalization decreases, the share of cash payments decreases. More cryptocurrencies and global stablecoins are on the market, which entail systemic risks. In this regard, China has come to the need to develop a retail payment infrastructure adapted to the digital era.

PBOC identified e-CNY as the central-produced bank digital version of the fiat yuan, which is managed by authorized operators. This is a hybrid financial instrument that has legal tender status in the territory PEOPLE'S REPUBLIC OF CHINA and a weak connection with accounts.

On deposits in the digital yuan, interest is not charged or paid, since the People's Bank of China classifies e-CNY as M0 money supply. There is no fee for transactions with the tool.

The launch of e-CNY is expected to increase the availability of financial services in China. Foreign citizens will be able to start a digital wallet without opening a bank account. In addition, the tool is compatible with existing payment systems.

Also, the digital yuan is ready for use in cross-border payments. With low volumes of anonymous transactions, e-CNY will also be able to support them. Transfers of large amounts are tracked.

The document provides for several types of digital wallets. Depending on the "degree of identification of the personal data," they have different limits for one transaction and the daily volume of transactions. Some less privileged accounts may be registered without providing proof of identity documents.

Legal entities and individual entrepreneurs can also open a digital wallet. They are subject to similar rules and have the ability to create several additional wallets tied to the main one.

The People's Bank of China also said that e-CNY supports smart contracts and is a programmable tool. At the same time, this opportunity does not violate its monetary functions.

e-CNY will be included in the regulatory framework, it meets the requirements for combating money laundering and financing, terrorism according to the document^[4]

The volume of transactions in China reached $5.3 billion, 20.8 million people opened virtual wallets

By mid-July 2021, the volume of transactions using the digital yuan conducted in China reached 34.5 billion yuan ($5.3 billion), as the country's Central Bank continues to outstrip global competitors in the development of virtual currency.

Across China, more than 20.8 million people have opened virtual wallets for storing digital currency and made a total of more than 70.7 million transactions.

By this time, the central bank had completed research and development of the design and functions of the digital currency. The Central Bank said it would continue to test and develop the system, but has not yet set a schedule for its official implementation.

Central Bank of China granted 10 million people the right to participate in testing the digital yuan

According to the representative of the Central Bank, by July 2021, China granted 10 million people the right to participate in the expanded test of the digital yuan, continuing to lead the world Central Bank in the development of virtual currency.

In 2021, China accelerated its push for the digital yuan by rolling out more testing in cities such as Shenzhen, Beijing, Shanghai and Chengdu, while ramping up the fight against cryptocurrencies.

"Cryptocurrencies have become speculative tools that threaten financial security and social stability and payment means for illegal activities and money laundering. Global stablecoins can create problems for international currency, payment and settlement systems, "said a representative of the Central Bank at a briefing.

"We are very concerned about this issue so we have taken some action."

ECB: The digital yuan is the main risk for maintaining the international role of the euro

Rapid progress China in the development of the digital yuan poses a key risk to maintaining an international role, ECB euro Governing Council member Francois Villeroy de Gallot said on June 30, 2021.

The governor of the Bank of France called on politicians in Europe to act quickly on their own equivalent efforts and more innovative payment solutions, "or risk the destruction of our monetary sovereignty - which we cannot allow."

The risk is clear that Europe will lose momentum, not only in its quest to strengthen the euro's international role, but even in preserving it. The challenge here is also geopolitical. "

China's Central Bank pays banks to use digital yuan

In mid-June 2021, regional banks Xi'an Bank and Hainan Bank joined the testing of the digital currency central bank of China. The new entrants are second-tier commercial banks that will not have direct access to the digital yuan but will be able to provide some services for a fee.

By June 2021, China's central bank is allowing eight operating institutions, including WeBank and MyBank, to issue digital yuan. Other local commercial banks are also connected to the participants - Bank of Shanghai, Changsha Bank, Suzhou Bank. However, due to technical differences, not all banks will be able to directly interact with the Central Bank in terms of full-fledged processing of operations with the digital yuan.

China's central bank pays banks to use digital yuan

Given the administrative costs for tier two banks, it is unclear by June 2021 how commercial banks like Xi'an Bank and Hainan Bank will be compensated for helping users access the digital yuan. As of June 2021, transactions with digital yuan remain free, so you cannot directly make money on them. One type of compensation is the provision of income by the Central Bank of China to participating commercial banks for opening accounts for new users.

Another option is to collect fees for the exchange of digital currency through bank cards. However, the possibility was ruled out by the central bank's deputy chairman, Fan Yifei, when he said in 2020 that "commercial banks do not charge individuals to exchange digital yuan."

Whether such banks will make money through retailers remains an open question. When retailers accept digital payments, they are typically charged for trading services through AliPay or WeChat Pay. So far, the Central Bank of the PRC has not announced whether retailers will pay to receive the digital yuan from customers, especially if they have no choice but to accept it. Given the positioning of digital yuan as cash, transactions may remain free. If not, this is one of the possible ways to stimulate second-tier banks.^[5]

Hong Kong asks to include it in digital yuan testing

The Hong Kong Monetary Authority (HKMA) in May 2021 is in talks with the People's Bank of China to expand cross-border testing of the digital yuan after cross-border payments were successfully tested.

The People's Bank of China is well ahead of other major banks central ones in developing its own digital currency, China having already expanded testing in major cities like Shenzhen, with wider rollout planned for the Winter Olympics in Beijing 2022.

Analysts said cross-border use of the digital yuan would be an important step towards global adoption of the currency for financial transactions.

China intends to launch a digital yuan into international circulation

Apparently, China will become the first country among advanced economies to create its own digital currency. According to a study by CBDC Tracker, more than 60 countries are currently either studying or already developing their national digital currencies, according to the Wall Street Journal in April 2021, ^[6].

The Central Bank of China began to study the possibility of launching a digital yuan since 2014. Over the past few years, the country has experienced a revolution in fintech: the population has massively begun to use the AliPay and WeChat payment systems.

As you know in 2019, Facebook announced the development of its own digital currency. The realization that it would be distributed to users superior to the population of any country immediately led to the understanding that technology could shake the position of traditional currencies. Perhaps for this reason, US regulators blocked Facebook's initiative. Meanwhile, China has accelerated the launch of the digital yuan by implementing a pilot in 2020.

The digital yuan will not significantly change the way money is handled in China's financial system. Under the leadership of the Central Bank, the 6 largest banks owned by the state will distribute digital yuan to small banks and fintech companies like AliPay and WeChat, which are expected to manage the interaction between sender and recipient. During the pilot project, implemented by the Central Bank of China, more than 100,000 people have already tried to pay for their purchases in digital currency, including at Starbucks and McDonald's.

The Chinese digital currency is under the control of the Central Bank and minimizes one of the main advantages of cryptocurrency - user anonymity. The digital format of money is expected to bring advantages to the Chinese government:

• new tools for monitoring your economy,
• tracking population spending online,
• assistance to victims of emergencies, identification of criminal activities,
• digital currency will allow both accrual and collection of fines to the population, immediately after the detection of a violation,
• bypass the SWIFT system, which is used for remittances between countries.

China, launching a project with a digital currency, has another goal - to weaken the effect of US sanctions. The use of the digital yuan is also aimed at protecting China's "monetary sovereignty."

Beijing positions the digital yuan, including for international turnover and develops it so that it is not tied to any world financial system.

The Central Bank of China believes that there is an opportunity to avoid the volatility of digital currency. The regulator will control the turnover of the digital yuan to guarantee the absence of a difference in value between cash and digital. This means that investors and traders will not be able to speculate, as is often the case with cryptocurrency. In addition, the Bank of China will develop measures to combat fake digital yuan.

Beijing also initiated the development of protocols for the cross-border use of digital currencies, interacting with the Bank for International Settlements and the Central Bank of Hong Kong, Thailand and the UAE.

2020

Digital currency will comply with cash laws

China's central bank digital currency (CBDC) will comply with laws that regulate the country's cash turnover. This was announced in September 2020 by Fan Yifei, Deputy Governor of the People's Bank of China (PBOC).

The digital yuan legally compensates for traditional paper currency. In the article, Fan noted that the digital yuan is "mostly positioned" as the M0 money unit and is part of the paper banknote and coin offering. "Thus, the digital yuan must comply with laws and regulations that relate to cash management," Fan said ―.

China Construction Bank Digital Yuan Wallet Announcement

On August 29, 2020, China Construction Bank, one of the four largest state-owned banks in China, opened public access to the wallet for the digital yuan. The corresponding function appeared in the bank's mobile application, but disappeared a few days later. Read more here.

​​V national cryptocurrency, the digital yuan, was launched in China

China Construction Bank (CCB), one of the country's largest state-owned banks, launched the yuan's digital wallet on its official app on August 29, Sina news agency reported. Users in areas where the digital yuan is being tested, such as Shenzhen, could register for a short time to install the^[7].

The bank's user agreement explains that the services provided by the yuan's digital wallet include payment, repayment, transfer and credit card top-up. There are four levels of yuan digital wallet with different balance and payment limits.

The balance limit for "first-class people" is set at 500,000 yuan ($72,829). Single payment limit of RMB50,000, daily cumulative payment limit of RMB100,000 and annual cumulative payment limit of RMB500,000.

The second level of the yuan digital wallet has an annual cumulative payment limit of 300,000 yuan, the third - 50,000 yuan and the fourth - 10 000 yuan.

The bank issues each wallet a unique identification number associated with the customer's information, including its name, password, mobile phone number, email address, customer number and bank card number.

However, the launch of the yuan's digital wallet did not last long. A few hours later, the wallet was "quietly closed," with a message roughly translated as: "the service has not officially launched, stay tuned. "However, many Wechat users were able to install the wallet within a few hours when it was available and they posted screenshots of the wallet activation and recharge pages.

There is no doubt that the wallet will eventually be launched, and this failure was caused by purely technical reasons. Something else is interesting here. You can definitely say two things. First, China finally headed for the destruction of the cash yuan in the near future. Second, the appearance in the functionality of the wallet of 4 categories of accounts will definitely be associated with a social rating, which is developing rapidly in the country.

Well, the maximum amount of $72,829 also suggests that this digital wallet is transitional and was created in order to control the costs of a wide range of citizens. At $72K, do not buy good housing, or an expensive car, given that this is an annual accumulative limit. But you still need to live on something.

And all this is clearly a pilot experiment for all cryptocurrencies of central banks. And a full scale digital yuan test will be launched in 2022 for the Beijing Winter Olympics.

Plans to use the digital yuan at the 2022 Olympics

In August 2020, China confirmed plans to use the digital yuan at the 2022 Olympics.

China plans to use the national digital currency in Beijing during the Winter Olympics scheduled for 2022, confirmed Sun Gofeng, head of the monetary policy department of the People's Bank of China.

To this end, the digital yuan is now undergoing internal testing. The tests are being conducted in the cities of Shenzhen, Suzhou, Chengdu and in the new state-level district of Xong'an, Hebei province.

At the same time, the Chinese authorities do not have a clear schedule for the release and implementation of the digital yuan, the representative of the Central Bank of the PRC emphasized.

Expanding testing to the most developed cities

China plans to significantly expand testing of the digital yuan. The Ministry of Commerce of the People's Republic of China on August 14, 2020 announced that the digital currency will be tested in large cities in the most developed regions of the country. These include Hebei Province, Guangdong Province, and the cities of Beijing, Tianjin, Hong Kong, and Macau.

The ministry did not say when testing would begin, but noted that the development of the project would be fully completed by the end of 2020.

Attracting Chinese banks to test the digital yuan

At the end of July 2020, the People's Bank of China (PBOC) entered into a cooperation agreement with more than 20 companies to test the digital yuan (DCEP). The development of the Chinese project was reported by Finance Magnates.

It is known that the Central Bank began to cooperate with four state banks - Commercial Bank of China, China Construction Bank Agricultural Bank of China and, Bank of China three telecommunications companies -,, China Telecom and and China Mobile China Unicom Industrial the technology giant. Huawei

Central Bank of China attracted banks to test the digital yuan

Financial institutions converted part of their deposits in the Central Bank into digital currency (CBDC) and identified sectors of the economy to promote the asset. Participants will have to test digital wallets designed to store digital currency. The creation of the technological solution was carried out in conjunction with major Chinese operators payment systems Alipay and WeChat.

Real testing of the digital yuan began with the payment of May transport subsidies to officials in Shenzhen, Suzhou, Chengdu and Xun'an. In the future, 19 stores and restaurants, including McDonald's, Subway and Starbucks, joined the testing.

In addition, the People's Bank of China is negotiating with the Bilibili streaming service, which has 170 million users. A series of promising partnerships marked the Central Bank's transition to the next stage of testing, which is expected to lead to successful results in the use of DCEP in the real world.

As the China full launch of the digital yuan nears, other international partners are also diving into testing their digital money. For example, the central France bank appointed eight partners Japan to test the concept of digital currencies, and the bank formed a new committee to study the concept of digital currency.^[8]

Testing begins on Meituan Dianping food delivery platforms

On July 15, 2020, it became known about the decision of the Central Bank of China (PBOC) to test the national digital currency on platforms managed by Meituan Dianping. The company specializes in food delivery solutions and is financially backed by tech giant Tencent. The joint project is expected to be an important stage towards achieving the mass distribution of the digital yuan.

According to Bloomberg, Meituan Dianping and the research division of the People's Bank of China are discussing the possibility of using digital currency (DCEP) as a legally recognized means of payment in the real world. Detailed information regarding cooperation has not been disclosed.

Meituan Dianping is not the only company that has expressed a desire to take part in testing the digital yuan. Another Chinese company Didi Chuxing (DiDi), which is one of the country's largest operators of the online taxi ordering service, also agreed to test the digital currency from the PBOC on its platforms. The Chinese regulator is also known to be interested in getting Bilibili, a video game publisher that is also backed by Tencent, to join digital yuan testing.

Central Bank of China begins testing digital yuan on food delivery platforms

Meituan Dianping and DiDi are already using the Tencent payment platform, so they are expected to be ideal candidates for developing government initiatives to digitalize the financial industry. The development of the digital yuan from the PBOC started in 2014, in the spring of 2020, the regulator organized development testing in several Chinese cities. Now the main efforts of the PBOC are aimed at preparing the legal framework for the launch of DCEP.^[9]

Commentary by a professor at the International School of Business at Zhejiang University

Comments on the nature of the new Kiat "digital currency of electronic payments" (CWEP), which China is introducing from the beginning of 2020, was given to Wen Wu (文武) - Professor at the International School of Business at Zhejiang University, who in 2011 became one of the founders of the eCurrency electronic currency, and Ben Shenlin (贲圣林) - Dean of the International School of Business, as well as founder of the International Monetary Institute at the People's University of China ( and, by the way, the independent director of the well-known company about the production of Tsingtao beer - Tsingtao Brewery Co., Ltd.).

Above all, "it's definitely not cryptocurrency because it doesn't require consensus." Secondly, "this is a payment system, not a monetary policy instrument," while the aggregate new money supply (that is, M2) is not created, and it replaces cash (M0). This means that it acts in parallel with cash.

Thirdly, this lies outside the functions of electronic Chinese payment systems such as Alipay and WeChat Pay, since digital money in Alipay and WeChat wallets still requires some real deposit, while CEE replaces cash and its reception will be immutable. CWEP will exist along with other forms of payment.

There is a two-tiered process in CEE: the People's Bank of China cooperates with private Chinese banks and exchanges cash for DCEP, and private banks exchange DCEP with citizens. "

In this case, the CEE will be used for a wide variety of purposes, such as tax payments or B2B payments. This is a "hybrid system of centralized architecture." There is no need to use blockchain at the lower level, where the system affects hundreds of millions of people at the level ("here blockchain technology will not function well"), but it is at the upper level, in cross-border mechanisms between enterprises and institutions that need trust mechanisms, here blockchain can be used as a management mechanism. And of course, "this is not to establish hegemony over other currencies, but simply for convenience."

The most important conclusion: this is for cross-border payments, that is, a new currency for entering foreign markets. A "second circuit" is created - the yuan itself is not affected and remains safe. There is no talk of any direct binding to the existing yuan.

Chinese Communist Party teaches officials how to handle cryptocurrency

In mid-May 2020, the Central Party School of China, which trains officials of the country's Communist Party, published a new book on cryptocurrencies.

China seeks to lead the tech vanguard and is undoubtedly aware that blockchain and digital currency will have an undeniable impact on the economy and society. The government's goal is to explore these technologies and rethink tomorrow's global monetary system, as well as train a new generation of Chinese officials to handle cryptocurrencies.

China's Central Party School Training Country's Communist Party Officials Publishes New Book on Cryptocurrencies

The authors of the new book include a former vice president of the People's Bank of China, a former vice chairman of the National Social Security Fund Council, a former chairman of the country's Construction Bank and other previously senior officials.

The book looks at the nature and future of digital currencies. The authors delve into the origin and history of cryptocurrencies regarding the legal provisions in force in the country. In addition, they also explore related areas, including cryptocurrency exchange, primary coin placement (ICO), stable coins, and so on.

The publication also conducts a comparative analysis of multifaceted discussions and theories, considers a systematic and practical approach, and also explores the risks associated with various types of digital currencies and proposed regulatory solutions.

The authors of the book devoted a separate chapter to the digital yuan, the release of which is supported by the state. They detailed its origins, meaning and the impact it would have on the payment system. In addition, experts conducted a comprehensive analysis of what distinguishes CBDC in China from other stable coins, such as Facebook's Libra. At the same time, the authors dwelled in detail on the negative impact of the Libra project on China's monetary sovereignty.^[10]

Officials in China begin to be given salaries in digital currency

In May 2020, it became known that Chinese officials are starting to pay salaries in digital currency as part of a national experiment to develop the digital yuan.

Part of the April salaries of civil servants will be paid in a digital currency equivalent to the usual yuan - for this they need to start electronic wallets in a special mobile application.

Salaries of Chinese officials begin to pay in digital currency

At the same time, it is not reported whether it will be possible to cash out digital money. It is only known that they can be used to pay for trips by public transport and food.

Former President of the People's Bank of China Li Lihui, commenting on the testing of the digital yuan during his speech at an online conference, said that this currency could eventually replace fiat money in the Celestial Empire. In his opinion, for this, the digital yuan needs the following: to gain recognition of people, to have lower transaction costs, sufficient economic scale and higher efficiency.

Lihway also noted that unlike local payment systems, like Alipay and WeChat Pay, the yuan's virtual counterpart, is designed to become independent of third-party banks.

It is assumed that the digital yuan, like bitcoin, will be anonymous. However, the central bank will set restrictions on the frequency and amount of the anonymous operation of each virtual currency user.

Due to the fact that cash transactions are not digitally recorded and transfer data from existing payment platforms are scattered, the central bank could not control cash flows in real time, Xu Yuan, an assistant professor at the National Development Research Institute of Beijing University, said in an interview with CCTV.

While there will be little change for consumers, for the central bank - in terms of oversight, future forms of financing, payments, business and social governance, and so on - this is the greatest jump ever, he claimed.[11]

Digital yuan testing in multiple cities

In mid-April 2020, it became known that the People's Bank of China began testing the so-called digital yuan in several cities. We are talking about the CBDC (Central Bank Digital Currency) project, also known as DCEP (Digital Currency/Electronic Payment).

The tests of digital currency in the Celestial Empire became known from social networks, where a photo was published showing a smartphone with a launched DCEP electronic wallet developed by the People's Bank of China.

The screenshot shows the mention of the Agricultural Bank of China (Agricultural Bank of China), which, apparently, is participating in the tests of the new currency. The photos also show a link to the abchina.com website, which is not available by April 15, 2020.

Screenshot of the application for the digital yuan project

The app was available for download for some time on mobile devices running iOS and Android, but then the link disappeared. CoinDesk browsers managed to download the program and study its functionality.

In the digital yuan app, among other things, you can make payments in retail stores by scanning a QR code, transfer money, bill and make P2P payments.

Users in the app can manage funds, integrate the wallet with other accounts, and view all transactions. It is assumed that the digital yuan will be integrated with the popular WeChat Pay payment system - WeBank is known to be involved in testing the national digital currency.

The new phase of development testing involves four state-owned banks, as well as a number of major companies, including Huawei and telecom giants China Telecom, China Mobile and China Unicom. In total, 22 companies are involved in the project. Interestingly, among them there is no Alipay - the largest payment system in the PRC. At the same time, the company noticed several patents related to the digital currency of the Chinese Central Bank.

By mid-April 2020, the digital yuan is being tested in four pilot districts: Shenzhen, Xionggang, Chengdu and Suzhou. The timing of the full-scale launch of the project has not been announced.

Chinese authorities hope that the release of cryptocurrency will allow the yuan to push the dollar out of the electronic payments market and undermine the dominance of the American currency.

The head of the investment company Sino Global Capital, Matthew Graham, believes that the US authorities have lost their chances of becoming pioneers in terms of the development of the national digital currency, since Beijing is almost half a step away from launching a digital yuan into mass circulation.

Ledger Insights confirms this: it, referring to the Chinese media, writes that by mid-April 2020, testing of the digital yuan is almost complete, and China only has to amend the legislation.

DCEP in China may become the only tool for the purchase of other cryptocurrencies by citizens of this country. The issue of liberalization of cryptocurrency trading is being worked out in Beijing, and crypto exchanges can receive official status to work in the Celestial Empire. By April 2020, China is prohibited from buying and selling cryptocurrencies, while  cryptocurrency mining is not prohibited, and the extraction of such assets is entrepreneurial activity, classified as one of the strategically important for the economy of the Celestial Empire.

In addition, in April 2020  , a technical committee of 15 organizations was formed in China to develop national standards for blockchain and distributed registry technology (DLT).^[12]

2019: Several companies begin testing China's Central Bank cryptocurrency

In early December 2019, the People's Bank of China announced cryptocurrency and began testing it, in which four large state-owned banks and three large telecommunications companies will take part. They will "compete" with each other, trying to present the most effective strategies for using the national cryptocurrency.

According to insiders, work on the creation and launch of a national cryptocurrency accelerated sharply after the release of Facebook's Libra stablecoin was reported. Although the central bank of China began a program to introduce digital currencies back in 2014, officials began to publicly comment on state cryptocurrency only after the announcement of the Libra project. The testing program will be carried out in two stages and will take over two main cities: Shenzhen and Suzhou. For testing, banks have chosen such popular applications as transport, education, medical care and retail.

China announced a cryptocurrency of its own production

As part of the pilot project, commercial banks will convert some of their central bank deposits into cryptocurrency, and then customers and businesses will be able to register digital wallets. Some banks involved in the testing announced a collaboration with telecommunications companies to develop SIM cards with built-in digital wallets, others created their own independent wallet apps.

Chinese media also report that some of the big banks involved in testing are partnering with smaller ones. banks While the major digital payments firms in and/companies are China Alipay WeChatWePay Tencent not officially yet participating in the pilot, these companies have been in touch with authorities about inclusion in testing.^[13]

Notes