China to trial digital yuan with restricted use cases

The authorities in Chengdu, the capital of Sichuan province, will distribute 12 million digital yuan ($1.85 million) among residents. A defining feature of this distribution is the programmable use cases of the CBDC.

100,000 lucky winners will be able to spend the digital yuan exclusively on low-carbon transport — metro, buses and bicycle rentals.

For the first time in China, the digital yuan will be constrained in its use. It can be used only through the Chengdu city transport apps Tianfutong and Meituan.

The initiative aims to test CBDC programmability and to promote public transport.

Winners of the lottery, as in the previous ten tests in six cities, must download and activate a special digital wallet. The mobile phone number must be the same as that used to register in the aforementioned apps.

Unlike the previous trials, the DCEP will be credited as coupons in Tianfutong and Meituan. They can cover only part of the trip, with the remainder paid in digital yuan after transfers from bank accounts to the wallet.

The experiment’s designers ruled out converting the coupons into CBDC for general use.

Earlier, the option to pay with the digital yuan was introduced by the authorities of Beijing and Suzhou.

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