The roll-out of the Chinese "Digital Yuan" is reported to commence in the coming weeks in a swathe of Chinese cities in the Greater Bay Area, including Hong Kong, Shenzhen, Macau and others, with over 70 million residents.
Back in March we reported that COVID-19 had caused a delay in the digital yuan, but it seems that despite that delay, during the first half of this year, a "closed trial of legal digital currency was successfully launched" and that the central bank of China will be "actively and steadily promote the development of legal digital currency" during the second half of the year.
Further, Shenzhen banks are reported to be preparing digital wallets to facilitate the introduction of a CBDC, but the move from testing to full deployment is expected to take 1-2 years.
Bai Hexiang, President of the Guangzhou Branch of the People’s Bank of China, published an article in China Finance which was reported to have stated:
We support the first pilot application of digital currency payment scenarios in the Greater Bay Area... pilots...accelerate the opening of digital currency applications by public service departments, actively expand digital currency payment application scenarios, and promote the first application of digital currency in the Greater Bay Area.
The details of the digital yuan in a retail deployment are not yet known, but there is a push for current mobile platforms and payment businesses to adopt the digital yuan as a more efficient alternative to payment channels interfacing with banks. As legal tender, the digital yuan may create an interesting requirement as legal tender typically cannot be refused, but to accept it would require some degree of technological and software investment by a business. It remains to be seen how much privacy users of a digital yuan will enjoy.
This roll out will serve as a wake up call to countries like the United States and Australia, which have been far slower to explore and pilot central bank digital currencies of their own.