China Announces First Public Distribution of Digital Yuan

In October, China will run a lottery to distribute digital yuan gifts. Shenzhen authorities will randomly distribute 10 million digital yuan among 50,000 residents of Luohu District in the form of the so-called red envelopes.

Just this month: the city government will randomly distribute 10 million yuan of DECP to 50,000 residents, 3389 merchants in Luohu District that have completed the transformation of the DCEP system provided support for this activity pic.twitter.com/MzR2PaJwXa

— chinadefi (@chinadefi1) October 8, 2020

Registration will be open from October 9 to 11. To participate, users must provide personal data, ID card numbers and mobile phone numbers. Wallets can be registered at China Construction Bank, Bank of China, Industrial and Commercial Bank, or Agricultural Bank of China.

When applying for activities, citizens need to fill in their personal name, ID card, and mobile phone number. The registration page also shows 4 state-owned banks, including China Construction Bank, People’s Bank, Industrial and Commercial Bank, and Agricultural Bank. pic.twitter.com/tKtj0fRFA8

— chinadefi (@chinadefi1) October 8, 2020

Recipients of 200 yuan (~$29.50) will be able to spend them from October 12 to 18 at 3,389 merchants, a list of which is available on the lottery site.

There are at least 2 restrictions on this activity: 1. Users need to register their wallets in designated banks 2. Users need to spend in specific merchants

— chinadefi (@chinadefi1) October 8, 2020

ForkLog reported that since the start of testing, the payment system based on the digital yuan (DCEP) has processed 3.13 million transactions totalling 1.1 billion yuan (~$162 million). During this period, more than 113 300 personal and about 8 800 corporate digital wallets have been opened.

China intends to outpace other countries and be the first to roll out CBDCs, including to edge the dollar from the world stage.

China’s successes have accelerated the ECB’s efforts to issue a digital euro. The Fed has broadened research into digital currencies. The Bank of Japan has formed a working group to study central bank digital currencies

How and why central banks are creating digital currencies (CBDCs)

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