China’s central bank has stated that the trial of its developing central bank digital currency (CBDC) is currently limited to retail transactions, as against claims stating that the digital yuan was used for large transactions.
Digital Yuan Test for Small Transactions
In a report by Global Times on Monday (August 24, 2020), the People’s Bank of China (PBoC) quelled rumors about the testing of its digital yuan. According to the central bank, the digital currency electronic payment (DCEP) is currently trialing retail transactions.
The report stated that some internet users claimed an individual was paid with a large amount of DCEP after conducting a house sale in Shenzhen. However, conversion from the PBoC’s DCEP to the local fiat currency was unsuccessful.
Contrary to the rumors that circulated the internet, an employee of the PBoC reportedly stated that the central bank’s digital yuan was a legal tender. The employee added that the digital currency could be converted to fiat at the ratio of 1:1.
Also, speaking to the Global Times, an assistant professor of the Gaoling School of Artificial Intelligence at the Renmin University, Wang Peng, said:
“At its current stage, the test’s primary goal is to ensure the digital currency’s operation runs smoothly and safe, 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.”
With China’s CBDC project getting close to its official launch, the government continues to intensify testing across different cities. As reported by BTCManager earlier in August, there were plans to expand the scope of the digital yuan testing to include more areas in the country. Also, the DCEP trial would launch in Hong Kong’s Greater Bay Area.
There have also been reports about some state commercial banks testing a digital wallet app for the DCEP. Earlier in April, the Agricultural Bank of China (ABC) rolled out a mobile application for the CBDC trial.
Central Banks Forging Ahead With CBDC Projects
While China continues to intensify its CBDC efforts, other central banks of different countries are also making progressive strides. Thailand’s central bank announced that large corporations will test its CBDC project for transactions, as it reached its third stage of development.
Japan also seems to be getting serious with its digital yen project, as the country’s central bank set up a new committee to accelerate the CBDC research. The Japanese government earlier revealed plans to input CBDC in the country’s 2020 economic and fiscal policy.