In brief
- China's digital currency is not being used in purchases of real estate, despite rumors.
- Only small-scale testing is currently ongoing in some Chinese provinces.
- Observers say the country will gradually scale up tests based on pilot results.
China’s digital yuan testing is limited to small-scale retail payments, despite numerous reports suggesting a larger roll-out, according to local news outlet Global Times.
Rumors from earlier this month suggested the digital yuan had expanded to large-volume transactions after reports of housing property in a Chinese province being conducted using the new currency circulated online.
“Shenzhen (has) received a large volume of digital currency from a local bank after selling a local property, and the digital currency could not be converted into banknotes,” the rumor went, as the report cited.
However, local authorities have since stated that digital yuan payments are small with no imminent plans to support large transactions. Currently, only small-scale pilot tests of the digital yuan—officially the Digital Currency Electronic Process (DCEP)—are ongoing in Shenzhen, Chengdu, and the Hebei Province, they added.
Of those, the Shenzhen subsidiary has been hiring for more positions in recent months. These include vacancies in blockchain development and for research engineers, but none to support a large-scale launch, at least yet.
Meanwhile, industry observers said the country is still testing the waters before eventually launching the digital yuan.
The second step in China's distribution of the digital Yuan will see the currency handed out to state employees next month.
According to a report from the local news outlet China Star market, the digital Yuan—known officially as a digital currency/electronic payment (DC/EP)—will replace half of state employees' transportation allowances. The test pilot will initially target employees in the city of Suzhou.
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"At its current stage, the test's primary goal is to ensure the digital currency's operation runs smoothly and safely, and to determine how DCEP is distributed from the central bank to financial institutions. Only when trials in retailing are successful will they be carried out in large transaction scenarios," Wang Peng, assistant professor at the Renmin University in China, told the Global Times.
Currency launches are tricky. As a Japanese regulator pointed out last month, the money must be accessible and available at all times. On the other hand, digital alternatives require citizens to own smartphones, devices not everyone has access to, plus access to the Internet. The regulator added that digital currencies can also fail to work during times of a natural disaster where electricity is cut off, presenting a critical issue.
The Bank of Japan is going full steam ahead with its research into a central bank digital currency, or CBDC.
The Asahi Shimbun, a Japanese news outlet, today published an interview with Takeshi Kimura, the central bank's department director-general. It reported that Kimura said that a CBDC is a top priority for the country.
“We will move forward with discussions while pushing up the level of consideration beyond the preparatory stage,” Kimura told the publication.
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But for China’s predominantly cash-less society, the shift to digital money is easier in terms of familiarity. Just don’t go house-hunting yet.
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