China’s Dalian Commodity Exchange has successfully used the digital yuan for fees settlement in the nation’s futures market, making it the first real application of the People’s Bank of China (PBoC) issued digital currency in the finance sector, according to a report by China Securities News Network on August 23, 2021.

Digital Yuan Facilitates Cost-Efficient Payment 

In a first, China’s central bank digital currency (CBDC), which is also known as the digital yuan, DCEP, digital renminbi or e-CNY, has been successfully used for payment by players in the country’s futures market.

Per sources close to the matter, Dalian Commodity Exchange, a non-profit, self-regulating exchange that has been in existence since 1993, used DCEP to pay storage fees to the delivery house named Dalian Llangyan Group Storage and Transportation Co.

Notably, the transaction was jointly facilitated by the Dalian branch of Bank of Communications, as well as the Dalian branch of the Bank of China, with the parties claiming that the digital renminbi offered significant cost-efficiency.

Jiang Bin, manager of Dalian Liangyun Group Storage and Transportation Co., Ltd said:

“Compared to traditional bank remittance payment systems, the digital renminbi payment for storage fees comes with zero handling charges, superfast payment processing, and more.”

DCEP Playing an Important Role 

Chinese authorities have been doing everything within their powers to permanently shut out public cryptocurrencies like bitcoin (BTC) from the country in order to give the digital yuan a chance to flourish and it appears the move is gradually paying off.

A spokesperson for the DCEP project has reiterated that the promotion of the digital yuan in the country is very important for the continuous development of the nation’s technology, economy, and society in general.

While there have been several successful trials of the digital yuan in real-life scenarios in recent months, the payment solution has not been used in the financial markets. With this latest milestone, the team says it firmly believes that in the near future, DCEP will power business innovations and gain significant traction in the financial markets.

According to the Bank of International Settlements (BIS), at least 80 percent of central banks across the globe are working on their CBDC, with a handful of them already in the advanced stages of the project. 

As reported by BTCManager on August 19, 2021, the Bank of Thailand (BOT) has revealed plans to roll out its CBDC in Q2, 2022.

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China continues to scale up efforts to test its upcoming digital yuan, as six state-owned commercial banks have added the responsibility of promoting the Chinese central bank digital currency (CBDC) wallet on employee assessment.

Employees to Get Users for Digital Yuan Wallet

According to local news media on Tuesday (July 6, 2021), the Industrial and Commercial Bank of China and Bank of Communications, along with four other Chinese banks will task each employee to publicize the digital yuan wallet to 200-300 people in a year. 

To enable increased adoption of the digital yuan wallet, the banks aim to offer small gifts to users. Some of the gifts that would be used to attract users include Chinese knots, laundry detergents, umbrellas, data cables, tissues, cardholders, among others. Meanwhile, the number of CBDC wallet signups would determine the end-of-year bonus given to each branch of the Chinese banks. 

Chinese financial institutions have been actively involved in the trial and promotion of the digital yuan. As reported by BTCManager back in April, six major state-owned banks pushed the use of China’s CBDC over existing payment options WeChat Pay and Alipay for a shopping festival. 

In February, the Postal Savings Bank of China (PSBC) created a biometric hardware wallet for efficient digital yuan payments. The Agricultural Bank of China (ABC) earlier developed the first digital wallet for the Chinese CBDC, and later designed a mobile application to enable digital yuan trials. 

China continues to carry out extensive e-CNY tests across different cities in the country. In June, workers in Xiong’an New Area received salaries in CBDC powered by blockchain technology. The government is also looking to trial the digital yuan on international visitors and athletes at the forthcoming 2022 Beijing Winter Olympics.

Despite the Chinese central bank’s efforts at promoting the CBDC, reports show that users seem unimpressed. According to some respondents, they preferred to use existing digital payment solutions offered by major companies like Alipay, while some other expressed privacy concerns, stating that the government could trace transactions. 

Meanwhile, an ex-official of the People’s Bank of China (PBOC) said the digital yuan was not designed to monitor users’ transactions.

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The Industrial and Commercial Bank of China (ICBC), has now made it possible for Chinese residents to easily exchange their DCEP, the nation’s digital renminbi for fiat yuan and vice versa, at thousands of automated teller machine (ATM) locations in the country, according to a report on June 18, 2021.

ICBC Introduces Digital Yuan-Cash Conversion

While apex banks in various jurisdictions are now in the advanced stages of their digital currency projects, China remains head and shoulders above its peers and the Asian giant has reached yet another significant milestone in its central bank digital currency (CBDC) journey.

Per sources close to the latest development, the Industrial and Commercial Bank of  China (ICBC), a state-owned financial institution that has been in existence since January 1984, has now made it possible for people to easily exchange their fiat renminbi to the digital yuan and vice versa at more than 3,000 ATM machines in the city of Beijing.

Notably, the ICBC has become the first commercial bank in the country to add support for fiat-digital yuan conversion at ATMs in the entire nation, alongside the Agricultural Bank of China (AgBank), one of the country’s “big-four” banks, which has also added the feature at over 10 automated teller machines in the Wangfujing shopping area of Beijing.

CBDCs Becoming a Thing 

So far, China’s CBDC project has been working out as planned, as the People’s Bank of China (PBoC) has successfully carried out several trials of the digital yuan in various cities of the nation in recent months. 

Though reports have it that early users of DCEP are not entirely excited over it, this June alone, China’s central bank has given out $6.2 million worth of its digital yuan token to residents participating in the latest phase of its CBDC trial and the country is now looking to start paying workers’ salaries with the digital currency. 

Just over a decade since Satoshi Nakamoto created the world’s first cryptocurrency, bitcoin (BTC), thousands of distributed ledger technology (DLT) based digital currencies have been launched, providing the masses with a faster and cost-efficient way of making payments and exchanging value globally.

The success of bitcoin and other cryptocurrencies over the years has spurred traditional financial institutions to start paying close attention to blockchain technology, especially in terms of developing their own digital assets. The Bank of International Settlements (BIS) has predicted that at least 20 percent of the world population will have access to CBDC by 2024.

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Beijing will give out 200,000 red envelopes worth 200 yuan to lucky applicants in a lottery to be launched in June. Fintech expert Su Xiaorui said that the giveaway is a trial to ensure the pilot work for digital renminbi has been done in an organized and market-oriented manner.

Registration Details

According to the Beijing Local Financial Supervision and Administration, applications will be accepted from June 5 via the Bank of China apps or Industrial and Commercial Bank of China.

The registration deadline is midnight, June 7. Individual consumers have been invited to apply by searching keywords: Jingcai or digital renminbi in Chinese as long as they are located in Beijing.

Selected merchants can spend the 200 yuan digital renminbi in the red envelope at nearly 2,000 designated commercial entities in core commercial districts in Beijing from June 11 to 20.

Trials in the Form of Lotteries

The world’s second-largest economy is leading globally to launch central bank digital currencies (CBDC). The country has held trials in several major cities, including Shenzhen and Shanghai. A test in Shenzhen in January gave away 20 million yuan.

Later in February, the southwestern Chinese city of Chengdu dispatched about 40 million yuan of digital currency. Last year, other cities like the Chinese technology hub of Shenzhen held their lotteries.

China is yet to unleash the digital yuan nationwide. The currency has been in development since 2014, focusing on trials in the form of lotteries around the country.

The People’s Bank of China (PBOC) targets to be the first significant central bank to issue a CBDC. This is part of its internationalizing of the yuan and lower dependence on the dollar-dominated global banking system.

Digital Yuan Formed for Domestic use

Li Bo, deputy governor of the People’s Bank of China (PBOC), said in April that the central bank would advance its pilot projects’ scope and even allow foreign visitors at the 2022 Beijing Winter Olympics to use it.

PBOC Deputy Governor Lee insisted in April that the digital yuan was created for domestic use, not to challenge the US dollar’s dominance.

Lee said that they have repeatedly said that it is a natural process for the renminbi’s internationalization. He added that their goal is not to replace the US dollar and other international currencies but to allow markets to choose and promote international trade and investment.

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