China’s Central Bank Digital Currency (CBDC)

Improvements have been implemented into China’s Central Bank Digital Currency (CBDC), often known as the digital yuan or eCNY. These upgrades have given the digital yuan the ability to participate in smart contracts, and they have also introduced a number of new use cases.

According to a story published on January 17 by a local cryptocurrency media site called 8btc, the smart contract capability was released on the Meituan app, which is a Chinese app that offers retail and food delivery services.

When a user of Meituan places an order and pays for it with their e-CNY wallet, a smart contract is triggered, and the contract examines the order for certain keywords and things that were bought.

If a user purchases an item that is included in the list of keywords for the day, they will be entered into a drawing for a chance to win a portion of a reward.

The award consists of a portion of a “red envelope,” also known as an hongbao in the area, which contains 8,888 yuan, which is equivalent to little more than $1,300.

Hongbao are wallet-sized packages that have long been used as an auspicious way to present monetary presents during the Chinese New Year celebration.

In an effort to encourage more people to use the e-CNY wallet app before the Chinese New Year begins on January 22, the developers included a function in December of the previous year that enables users to send digital red envelopes to one another.

In conjunction with the most recent advancement, new applications for the e-CNY have also been developed during the course of the last several days.

According to a story that was published in the China Shares Journal on January 16, e-CNY was utilised for the very first time to purchase securities.

In addition, investors are able to purchase assets via the CBDC by using the mobile app for Soochow Securities, which is a local brokerage business.

According to a report published on January 11 by Yicai Global, the digital yuan wallet software has gotten an upgrade that enables users to conduct contactless payments using their Android phones even when their device does not have access to the internet or electricity.

The new applications for the digital yuan come at a time when China is having difficulty increasing the usage of its central bank digital currency (CBDC).

In December 2022, a former official from the People’s Bank of China (PBOC), the country’s central bank, made a rare public admission saying that the digital yuan’s “usage has been low” and “highly inactive,” and added that “the results are not ideal.” This admission was made by saying that the digital yuan’s “usage has been low” and “highly inactive.”

On January 10, the People’s Bank of China (PBOC) for the first time included e-CNY in currency circulation data, which revealed that the CBDC constituted around 0.13% of the 10.47 trillion yuan ($1.54 trillion) in circulation at the end of 2022.


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Chinese food delivery giant joins CBDC efforts

China’s food delivery giant Meituan has become the latest tech firm to integrate central bank digital currency (CBDC) payments for its services.

Meituan users can link the digital yuan wallet to their service app and use it for a range of daily services such as booking hotels, cabs and paying at restaurants. The food delivery and daily services app recorded 660 million transacting customers last year, and the integration of e-CNY payments would only help the Beijing government to test its sovereign digital currency more widely.

Over the past few months, major tech giants in the country such as WeChat and have joined the mass retail testing of e-CNY.

China completed the development of its CBDC in 2019 itself, and over the past two years, the authorities have been extensively testing its use in the retail market. The CBDC pilot began as a travel subsidy for government employees and later expanded to include millions of people and thousands of businesses.

While there hasn’t been any indication of a public launch yet, many believe the growing pace of trials suggests that the government might be looking to launch the CBDC during the upcoming winter Olympics starting on February 4th.

Related: US lawmakers don’t want Olympic athletes to use digital yuan at 2022 games

Zou Lan, director of the PBOC’s financial markets department has said that the cumulative transactions in e-CNY have reached 87.57 billion yuan ($13.68 billion). By the end of October 2021, nearly 10 million merchants had activated digital yuan wallets.

China is currently at the top of the CBDC game, having started the development for the same as early as 2014. While 91 nations have started their CBDC development, only a handful have reached the pilot phase including China, South Korea, Switzerland and France. The United States is currently in the discussion phase and lawmakers weighing in the pros and cons of a sovereign digital currency.