China’s central bank has plans in place to test its digital yuan. For now, 19 restaurants and retail shops, including Starbucks and McDonald’s, have signed up for the testing in the Xiong’An district.
According to reports, many government-owned commercial banks are already creating digital currency electrons payment (DC/EP) wallet applications for the digital yuan. And all this seems to herald the preparation for the proposed testing and launch of its central bank digital currency (CBDC).
Several representatives of government agencies, commercial banks, and Tencent attended the meeting in Hebei as reported by local news outlet Chainnews. Representatives of Ant Financial, as well as the entire group of 19 retail shops, restaurants, were also present.
More info on the testing
As mentioned, many top merchants have enrolled in the scheduled testing for the digital yuan including Subway, JD Supermarkets among several others. However, there are still no specific details on when the test would commence or for how long it will continue.
In light of this, there are many theories doing the rounds regarding the CBDC launch. Last week the Agricultural Bank of China designed a test interface for its DC/EP wallet. The interface indicated that the test would take place not just in China’s new Xiong’An district, but in Chengdu, Suzhou, and Shenzhen as well. Another local news outlet reported that the testing in Suzhou would involve issuing government officials their transportation allowance in digital yuan.
China’s central bank has confirmed the testing, but has, however, stated plainly that “it does not mean the digital yuan has been launched officially.”
CBDC vs Bitcoin and Altcoins
In a recent newsletter, we covered details on the effects of several countries launching a CBDC.
Below are highlights of the newsletter.
A recent survey shows that about 10% of central banks will inadvertently issue Central Bank Developed Cryptocurrency (CBDC). China is actively working on its CBDC launch, despite the ongoing rampage of the COVID-19 pandemic.
While this seems like good news, let’s consider the effect of these CBDC launches on Bitcoin and other cryptocurrencies. Barry Silbert, founder and CEO of Digital Currency Group and Greyscale Investment strongly believes CBDC will do more good to cryptocurrencies like Bitcoin.
For one, Central Banks will be actively involved in building a more robust infrastructure. The non-centralized cryptocurrencies can always make use of this infrastructure to scale up their services and performance.
CBDC will never be capped and that means there will be no finite supply. This, in essence, means that CBDC is only a digital counterpart of fiat and is centralized. It could, however, project the importance and benefits of crypto to everyday users. Thereby leading to more adoption.
We previously reported China’s inauguration of a blockchain committee with top firms like Tencent, JD.com, Huawei, etc. Earlier this year, we had covered a piece on the World Economic Forum releasing a toolkit to facilitate CBDC launch. Also, last month the Bank of England reportedly announced thinking of coming out with a CBDC.