China Commences Internal Testing of Central Bank Digital Currency

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The Chinese central bank has already commenced internal trials of its statutory digital currency, with plans for deployment on the Suzhou transit system by as early as May.

Yicai reports that internal testing of the People’s Bank of China’s (PBOC)’s central bank digital currency (CBDC) has already commenced at banks in an initial group of trial locations including Suzhou, Xiong’an, Chengdu and Shenzhen.

On 16 April several sources from Chinese banks told 21st Century Business Herald that PBOC had taken the lead in conducting internal testing of the CBDC, and that some staff had already used it for payments applications including party membership dues.

According to the sources the CBDC is still at the stage of internal research and development, with PBOC still highly concerned about confidential testing.

Bank of China has confirmed that it is using the CBDC for internal purposes as part of its “321 Project” and that trials have commenced with internal apps and payment scenarios at locations including Shenzhen.

BOC has not yet developed a specialised wallet app for the CBDC, but has instead embedded functionality into existing apps.

The Securities Times reports that the CBDC will be deployed in Suzhou in May in the form of a 50% transportation fee subsidy provided to the staff at district level authorities.

Banks participating in the Suzhou trial include the original big four state-owned banks of ICBC, the Agricultural Bank of China, BOC and China Construction Bank, with the installation of CBDC wallets set to be completed in April.

According to the report around 1 trillion yuan in CBDC will be provided initially, serving as a partial substitute for the M0 money supply.

A senior PBOC official first flagged the imminent release of a statutory CBDC in August of 2019.

Efforts to launch a CBDC have continued despite the spread of the COVID-19 pandemic, with ABC recently releasing a trial app containing features for use with a statutory digital currency.

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