The Chinese authorities have announced plans to give away 15 million yuan, valued at $2.3 million. The yuan will be distributed to the residents of the Shenzhen Futian district. The distribution of these funds seeks to bolster the adoption of China’s central bank digital currency (CBDC).
China’s plans for a CBDC
China banned private cryptocurrencies last year, but it has been open to CBDCs. Over the past year, the country has pushed for different initiatives to make the digital yuan popular and boost its usage within the territories where the trial phase has been launched.
A report by Global Times said that this move would involve the distribution of more than $2 million worth of e-yuan to Futian residents. The distribution will be done in the form of a lottery via WeChat payments. Residents of the district can be part of the lottery by registering to receive the digital yuan.
After successful residents receive the digital yuan, they can spend it at around 5000 stores, and there will be no requirements for a minimum purchase that can be made. This will be the second time that residents of Shenzhen are receiving the e-CNY. In 2020, 10 million yuan was distributed to the city residents.
The trial phase for the digital yuan is also being conducted in Beijing and Chengdu city. In Beijing, $6.2 million worth of the digital yuan has been distributed, while $4.6 million has been distributed in Chengdu.
The growth of the digital yuan
Towards the end of last year, Chinese users with digital yuan addresses reached 140 million. This constituted 10% of the country’s population. The number of digital yuan holders has increased to more than 260 million people by the start of 2022.
Some of the leading local companies in China already accept the use of CBDC payments. JD.com allowed its customers to use the digital yuan for payments during the Singles Day shopping festival.
WeChat, a messaging app giant, based in China, allowed its clients to transact using the digital yuan. The payments option was open to all citizens where the trial for the digital yuan was taking place. WeChat is the largest social platform in China.
During the Beijing Winter Olympics, China announced that foreign athletes and visitors could use the digital yuan. The purpose was to allow the country to test the digital yuan’s use in cross-border payments. However, the US urged its athletes not to use the digital yuan due to privacy concerns.
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