The Chinese government has flagged the launch of digital currency trials in the southern tech hub of Shenzhen.
China’s State Council has just released the “State Council Opinions Concerning Support for Shenzhen to Establish an Advanced Demonstration Zone for Socialism with Chinese Characteristics” (中共中央国务院关于支持深圳建设中国特色社会主义先行示范区的意见).
The Opinions moot the provision of support to Shenzhen to undertake research into digital currencies, mobile payments and other fintech innovations.
The release of the Opinions arrives just after a senior official from the Chinese central bank said that the launch of a statutory digital currency was “imminent.”
According to the Chinese central bank the statutory digital currency will consist of a “two-tier” system involving the central bank exchanging digital currency with financial institutions, who will in turn exchange it with individual investors and consumers.
Domestic observers say the flagging of support for digital currency research in Shenzhen by China’s State Council points to the launch of statutory digital currency trials in the city.
“Once a statutory digital currency is successfully researched and developed, they will first conduct trials before promoting it broadly,” said Dong Ximiao (董希淼), vice-head of the Chongyang Institute for Financial Studies, Renmin University, to China Securities Journal.
Dong points out that selection of the trial city would involve consideration of factors including financial infrastructure, financial ecosystem environment, financial institution capabilities and tech company capabilities.
For this reason Shenzhen is an outstanding candidate given the presence of leading financial institutions such as China Merchants Bank and Ping An Bank, as well as tech giants such as Tencent.