As part of China’s plans to expand its digital currency testing, online banking platform MYbank, backed by Alibaba’s affiliate fintech giant Ant Group, has reportedly joined the digital yuan pilot program.
China Reportedly Tapping Private Sector for Digital Yuan Test
According to Bloomberg on Monday (Feb. 22, 2021), anonymous sources revealed that MYbank would bring its online services to China’s digital currency electronic payment (DCEP) app. Another digital bank, Webank, founded by Chinese tech giant Tencent Holdings, would also be participating in the digital yuan trial program.
Indeed, banks have also been at the forefront of bootstrapping adoption of the digital yuan especially in the area of developing hardware wallets for the DCEP. The Agricultural Bank of China (ABC) launched a mobile application for digital yuan trial, while its Xiongan branch created a digital yuan hardware wallet. Also, the Postal Savings Bank of China developed a biometric hardware wallet for CBDC payments.
As previously reported in August 2020, the country’s central bank was reportedly looking to use its CBDC project to lessen the dominance held by Tencent and Alibaba in the digital payments sector. China has a vibrant electronic payments industry, with everything from grocery buying to bus rides conducted via mobile phones.
Also, statistics show that tech giants Tencent and Alibaba control over 90 percent of mobile transactions. According to speculations, the government is looking to water down the dominance enjoyed by both companies to provide fair competition for commercial banks.
Meanwhile, tapping into the online payments sector shows the government’s efforts at expanding the scope of its digital yuan trials. Different CBDC tests have also been conducted in cities like Shenzhen and Suzhou through various airdrop events.
Shenzhen carried out its first airdrop event, in October 2020. Although authorities said the CBDC red packet event was successful, some recipients were unimpressed with the digital yuan, stating it was no different from existing payment options.
Shenzhen further conducted two airdrop programs in January 2021. As part of the city’s second digital yuan trials, the ABC launched ATMs in different parts of Shenzhen to enable the conversion from cash to DCEP.
Suzhou has also distributed free digital yuan in lottery events, with the latest conducted in February 2021.