24 Sep 2020 Anthony Lehrman
China’s Digital Yuan Undergoes Credit Card Payments Pilot Project
China’s national bank continues the aggressive development of their DC/EP (digital yuan), as the People’s Bank of China (PBoC) is currently running a pilot project for examining use cases of the digital currency in terms of card payments, fees, credit card payments, and other DC/EP-related transactions.
Authorization, research, and development of China’s digital yuan began almost five years ago. Since then, the crypto community has been impatiently waiting for the official announcement of the launch, with several speculations circulating online for an official launch by September last year. However, the first real evidence of DC/EP release emerged at the start of 2020, with the PBoC running various use cases tests of the upcoming digital currency.
Among the first pilots for DC/EP was the digital yuan used as a travel subsidy in 4 major cities. The pilot program expanded into fast-food and beverage companies, which included giants like McDonald's and Starbucks.
Local tech news outlets in China reported that PBoC is currently in the phase of testing a new use case for the digital yuan through the credit card ecosystem, which will be used as a way of attracting new customers. Most of the crypto enthusiasts believe the credit card trials to be the final phase before a possible public launch.
China’s central bank also announced that the institution would launch three new pilot free-trade-zones (FTZ), which would add up to the one already functioning in the province of Zhejiang. According to the bank, the free-trade-zones are a pivotal point of turning China into a global blockchain hub for enterprises.
Also, PBoC announced the launch of three innovation trial projects - Financial Technology Innovation, Digital Currency, and National Small and Micro Enterprise Digital Credit Reporting Pilot.
Meanwhile, PBoC also began internal tests, after gathering initial results. Chen Bo, Director of Digital Finance Research Center at the Central University of Finance and Economics, noted that “the internal testing is mainly to test the technical reliability and maturity of the digital currency.”
The internal test requires that the digital currency should only run within "a very clear boundary, which is quite demanding for the test scenario", Bo added.
However, despite China’s efforts in the fiat digitalization realm, many people have warned the crypto society that the DC/EP may not work on a truly decentralized blockchain, which may turn the digital yuan into a tool for controlling the money flow outside the country. Nevertheless, China set itself as a dominant player in state-run digital currencies, as many countries followed the Chinese example and started researching the possibilities of integrating a national digital currency.
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