China’s central bank digital currency could be inching closer to its official launch, as some top state-run commercial banks in the country are reportedly trialing a digital wallet for the national digital currency.
Digital Wallet App Used for Payments and Transfer
According to Reuters on Thursday, he banks are involved in large-scale internal testing of the app for China’s planned digital currency electronic payment or DCEP. The trial has seen staffs of these local banks in different cities use the digital wallet app for making payments and transferring funds.
As reported back in April, the Agricultural Bank of China (ABC) launched a mobile application for the trial of the CBDC project. The testing was said to be conducted by whitelisted citizens in four cities including Shenzhen, Xiong’An, Chengdu, and Suzhou. Other companies such as Starbucks, McDonald’s, Didi, and Meituan Dianping are participating in the DCEP trial.
The latest testing of China’s CBDC reflects the country’s progressive digital yuan efforts. While the CBDC bandwagon continues to see more entrants, the People’s Bank of China (PBoC) maintains the lead.
Earlier reports revealed that China was looking to accelerate its CBDC plans because of the economic friction between the country and the United States. Another reason was to make the national digital currency available for the COVID-19 stimulus payment.
Also, Beijing reportedly has plans to push its CBDC for cross-border transactions. The increased use of the yuan for international settlements could challenge the U.S. dollar hegemony.
China CBDC Looking to Gain Foothold in the Digital Payment Sector
Apart from testing the DCEP with major businesses, cities, and institutions, the government is reportedly looking to reduce the dominance of the digital payment market by the private sector. According to a recent report as Tencent’s Wechat Pay and Alibaba’s Alipay controlled the country’s electronic payment industry.
However, the government’s national digital currency could eat into the private sectors’ dominance and also level the playing field for commercial banks. In addition, there are plans by the PBoC to develop a universal barcode to make the QR code payment system easier. The planned universal barcode could threaten Alibaba’s and Tencent’s market dominance.
While the Chinese government has no affinity for the cryptocurrency sector, the country is keen on being a blockchain leader and promoting the adoption of the technology. Blockchain Services Network (BSN) which launched in April 2020, integrated six leading public blockchains including Ethereum and Tezos.