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China’s Central Bank Testing Digital Currency

Guangzhou Daily reported that China’s central bank, The People’s Bank of China, is testing the use of digital currency in the accounts of the Bank of Agriculture through transportation subsidies.

According to the central bank’s Digital Currency Research Institute, the digital renminbi is being used in pilot tests in Shenzhen, Suzhou, Xiong’an, Chengdu, and the future Winter Olympics site.  Because these are internal, closed pilot tests, such testing does not mean that the digital RMB is officially issued or will affect commercial operations. Nor will it affect the RMB issuance and circulation system, the financial market, and the social economy beyond the testing environment.

The central bank has been studying official digital currency since 2014. At the end of 2017, with the approval of China’s State Council, the central bank organized some commercial banks and relevant institutions to research and develop a digital RMB system jointly.

It is expected that the central bank will follow a gradual promotion for its digital currency, starting with the four major banks’ payroll payment clients and public service clients, and then gradually expand to online companies and operators.

Unlike Alipay and WeChat Pay, the functions and attributes of the central bank’s digital currency are similar to paper money, except that it is digital. Third-party Internet payments such as Alipay and WeChat Pay use commercial bank deposit currency settlements.

Source: Xinhua, April 20