The People’s Bank of China (PBOC) is launching a pilot program to trial its new digital currency yuan with 19 local businesses, including the U.S. chains Starbucks, Subway and McDonald’s.
The digital currency trial is being held in Xiong’an New Area, a city being built south of Beijing. China is the first country to launch a central bank digital currency (CBDC) or digital currency electronic payment (DCEP). The digital yuan is structured using a central bank-issued CBDC for commercial banks and a commercial bank-issued CBDC focused on the public.
“It’s certain that the DCEP is now in its final testing stage and should be officially launched,” BlockVC, an investment firm, said in a research note, according to a report in the South China Morning Post on Thursday (April 23).
The digital currency is expected to launch later this year or in early 2021, but no specific time frame has been announced. Central banks around the world have pondered introducing digital currency after Facebook announced plans to launch the stable coin Libra.
The pilot was announced at a promotional event on Wednesday (April 22) that was organized by the National Development and Reform Commission and was attended by representatives from Tencent and Alipay, the Industrial and Commercial Bank of China, the Agricultural Bank of China, the Bank of China and the China Construction Bank.
Further tests will be done in Shenzhen and Chengdu and ahead of the 2022 Winter Olympics in Beijing.
The yuan pilot tests became known to the public after a screenshot circulated on social media earlier this month that supposedly showed a new digital yuan app from the Agricultural Bank of China. The PBOC digital currency research institute said testing was being conducted in four cities: Shenzhen, Suzhou, Xiong’an and Chengdu.
The Financial Stability Board (FSB) — the regulatory watchdog of the Group of 20 (G-20) — recently warned global regulators that possible stablecoin disruptions should be addressed before Facebook’s Libra is released.
The FSB outlined 10 recommendations for global stablecoins (GSC) that provide a unified, global approach to stablecoin supervision. The G-20 mandated in June 2019 that the FSB examine regulatory issues related to GSC.