Suzhou Government to Airdrop $5 Million in Digital Yuan for CBDC Trial

Chinese city Suzhou is set to airdrop 30 million yuan ($5 million) to citizens in the latest round of digital yuan tests. This was revealed by the regional government yesterday in a press release informing citizens of the distribution.

150,000 Recipients to Receive Digital Yuan

The giveaway is expected to occur on Friday, with a total of 150,000 red envelopes containing 200 yuan ($31) set to be distributed to citizens across the city. The regional government revealed that the distribution was part of the government’s incentive towards the New Year Festival celebration.

Suzhou Citizens will have to install the necessary apps to make an appointment for registration for the lottery. The reservation period will take place on February 5 and close at midnight on February 6. Eligible participants will be chosen via a lottery draw 

Suzhou government further stated that the lottery result would be revealed on February 10 and the digital yuan sent through approved applications. Once received, citizens will spend the digital yuan at designated online e-commerce and offline merchants from February 10 to February 26.

Digital Yuan at Advanced Testing Phase

China has continued to accelerate its central bank digital currency, the “Digital Yuan .” Several tests have been conducted in several cities in the past few weeks as the government looks to accelerate the digital currency’s deployment in the first quarter of the year.

According to government officials, the last major digital yuan airdrop in Shenzhen was a success, with residents using the currency to perform over 140,000 transactions during the test period. This followed the announcement that the Agricultural Bank of China had kicked off testing ATMs that would allow customers to convert their cash to digital yuan.

China’s accelerated pace in deploying the digital yuan has caused notable concern from western economic powers. Economic rival Japan recently announced plans to research about developing a national digital currency. South Korea is also closing in on the final phase of its CBDC test pilot program.

European nations are not left behind with France already testing a prototype of the digital Euro in partnership with the blockchain platform Tezos. Estonia has also revealed plans to begin consultations and development of a digital currency that will be used within its financial system.  2021 is likely to be the year when CBDC finally become adopted by many nations.

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Suzhou Next City in China to Test Digital Yuan DCEP in Red Envelope Event

As part of its continued efforts to launch its digital yuan dubbed the Digital Currency Electronic Payment (DCEP), China’s central bank is scheduled to test its central bank digital currency for the second time in Suzhou on December 12. The city located in Jiangsu Province of East China will play host to a shopping festival dubbed “Double 12” and gauge the DCEP’s feasibility following its earlier trials in Shenzhen.

Testing offline payment and touch to pay functions

As per the announcement:

“Following Shenzhen, Suzhou will launch a digital RMB red envelope test on 12-12 (a shopping day like 11-11). Many merchants have installed NFC QR code. It is said that offline payment and “touch to pay” functions are available now.”

The shopping festival will mimic Single’s Day marked on 11th November as a holiday and shopping season that celebrates people who are not in relationships. The red envelope trial event will be used to test DCEP’s additional features like offline payment, which enables users to make transfers by simply touching smart devices. These capabilities were not tested in Shenzhen.

In October, China’s central bank teamed up with Shenzhen city to distribute coins worth 10 million yuan, approximately $1.5 million to residents. The giveaway was to adopt a lottery system with around 50,000 beneficiaries, who were to have the liberty to spend the digital currency across more than 3,300 shops located in Shenzhen’s Luohu district.

Getting ready for the second rollout

As a way to prepare for the second rollout of the digital yuan, various establishments in Suzhou’s Xiangcheng District have already introduced QR code and NFC (near-field communication) capabilities for a smooth spending experience.

This planned rollout comes days after the International Monetary Fund (IMF) advised central banks to tread with caution because they may be jumping the gun by overlooking some essential legal frameworks needed for a CBDC to work. The IMF acknowledged that strong legal frameworks are needed because CBDCs pose reputational, financial, and legal risks for central banks.

Image source: Shutterstock


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