China’s push into the world of digital currency is poised to take another big step forward.
Ride-hailing giant Didi Chuxing is teaming up with China’s Central Bank to develop a digital yuan for use in the transportation industry.
In an announcement on Wednesday (July 8), Didi said it will be working with the Digital Currency Research Institute of the People's Bank of China (PBOC) on the project, with a launch reportedly being eyed for next year.
The Central Bank’s decision to partner with Didi comes as the ride-hailing service rebounds after its business took a hit earlier this year with the onset of the coronavirus pandemic.
Ride-sharing orders on Didi’s platform recently surged past the 30-million-a-day mark, CEO Cheng Wei has said, with the company claiming 550 million users.
The Chinese government has been interested for years in developing a sovereign digital currency, with coronavirus health restrictions related to the handling of paper money and hard currency giving an added boost to those efforts.
“Recently, the Digital Currency Research Institute of the People's Bank of China and Didi Chuxing officially reached a strategic cooperation agreement to jointly study and explore the innovation and application of digital RMB in the field of smart mobility,” Didi said in a statement on Wednesday. “Both parties look forward to establishing a cooperative relationship, giving full play to their respective advantages and promoting the digital ecological platform construction in a diversified travel scenario, so as to achieve complementary advantages and win-win cooperation.”
Transactions using the digital yuan would reportedly take place through an app and involve the use of a smartphone, with the currency tied to the user’s phone number.
The digital yuan, in turn, could be exchanged between phones much in the same way cash is exchanged by hand, according to RT, independent of the need for a bank to act as an intermediary.