A major city in China will give away 10 million yuan in digital currency from the central bank this weekend. Recipients can use their digital dollars in 3,389 stores next week. The city’s goal is to give gifts to increase the use of new government-supported digital currencies.
Chinese cities donate digital yuan
According to a report from the South China Morning Post on Friday, Shenzhen, China, will give a total of 10 million yuan (US$1.49 million) of central bank digital currency (CBDC) to 50,000 residents to increase its utilization rate. This is part of a digital RMB pilot program in several major cities in China and the first public test of a digital currency. Shenzhen is famous for its shopping destinations and is a modern metropolis in southeastern China that connects Hong Kong with mainland China.
The renminbi digital gifts will be carried out through the lottery in Luohu District, Shenzhen. Winners will receive a digital “red envelope” containing 200 yuan in digital currency. The gift box is a gift envelope traditionally used in China to give money on holidays and special occasions. Starting Friday, individuals living in Shenzhen can register for lottery tickets through the blockchain-based service iShenzhen operated by the Shenzhen government.
According to a statement from the Shenzhen Municipal Government, the winners will be announced on Sunday. Then, they will use the official digital renminbi application to send them a link to open the digital wallet to request the red envelope. The publication has been relayed and pointed out that the application is currently not available for public download.
From October 12th to 18th, digital yuan red envelopes can be used at 3389 designated stores in Luohu District, including Sinopec gas stations, Wal-Mart stores, China Resources Vanguard Mall and Shangri-La Hotel. The recipient cannot transfer their red packets to others.
Liao Qun, chief economist of CITIC Bank International, believes that this kind of digital renminbi gift will increase the use of digital currency to a certain extent. Dan Wang, chief economist of Hang Seng Bank (China), agrees, and pointed out that the multiplier effect will increase the sales generated for every RMB donated. He was quoted as saying: “Rough calculations show that this 10 million yuan plan will generate a total demand of at least 50 million yuan.”
Fan Yifei, the deputy governor of the People’s Bank of China, recently revealed that the digital renminbi is called Digital Currency Electronic Payment (DCEP), which has been used in 3.13 million transactions, worth about 1.1 billion yuan. In addition, the Shenzhen Municipal Government recently rewarded approximately 5,000 medical workers with digital renminbi in response to the Covid-19 pandemic.
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