Chengdu is one of the two cities in China that will distribute digital yuan to its citizens, as the country continues to run series of tests for its central bank digital yuan.
The city will give out about $8 million to winners of the lottery, while Suzhou city is set to carry out a similar test. This will be the third time the Chinese digital yuan is tested in public, which indicates that its final launch is at hand. It will also be the biggest it has distributed for the same cause since the first pilot program.
With the pace of China’s CBDC development, the country is on track to become the first-ever to rolls out a government-backed digital currency.
According to reports from local media, the trial will begin on January 27 and continue until February 26.
The first of such pilot tests for the CBDC was carried out last month, with three major regions selected for the tests. The Ministry of Commerce said the three major regions include Greater Bay Area, Yangtze River Delta, and Beijing-Tianjin-Hebei region.
Xiongan, Suzhou, and Shenzhen have all hosted initial trials for the Digital Currency/Electronic Payments (DCEP).
The People’s Bank of China, earlier this year, revealed that China is still carrying out research and development regarding the digital yuan.
JB.com to Accept new CBDC
“The People’s Bank of China will undoubtedly further its research and development of the national digital currency,” the bank reiterated.
A report last month revealed that China is also planning to roll out pilot tests of its CBDC in Hong Kong, as the Hong Kong authorities are closely working with the Chinese apex bank to make that goal possible.
JD.com, China’s e-commerce giant, has already been contracted to accept the digital currency during the trial period.
The Bank of Communications released an internal memo about the pilot test in Chengdu, cited by Chinese payments media Mpaypass.
Also, JD.com wants to give away an additional 20 million digital yuan, worth about $3 million, that can be used to obtain services or purchase goods online.
Fund Distribution Through a Lottery
The distribution or giveaway will be done through a lottery to give everyone an equal chance of winning. It follows the same method used in the previous CBDC tests in Suzhou and Shenzhen in October last year.
However, the local government is still mute about the upcoming digital yuan test. There is no estimate on the number of residents that would participate in the lottery.
On the other hand, the first city to carry out the CBDC test, Suzhou, will be kicking off its second city-wide test on January 27. The city is preparing to issue 40 million digital yuan ($6.1 million).
The funds will be distributed in red envelopes, which can be used to pay both online and physical addresses. While 20 million can be spent on e-commerce DJ.com, $30 million of the funds can be used to make purchases on offline stores.