Some civil servants have already received part of their salary in the form of digital currency in Suzhou, according to Chinese state-owned media.
The news of the city in southeastern Jiangsu Province came from China Central Television’s WeChat opinion article. The piece added that the internal testing of digital currency is carried out in an orderly manner in Shenzhen in southern Guangdong Province; and 19 companies have begun to pilot digital currency in Xiong’an New Area in northern Hebei Province.
The article also said that the digital currency will be as ubiquitous as the current most two popular payments in China, Alipay and WeChat Pay, in future.
Currently, central banks around the world are ramping up Central Bank Digital Currency (CBDC) pilot experiments.
According to a January report by the Bank of International Settlements, ever more central banks are currently or will soon be engaged in CBDC work. Some 80% of central banks in 2019, up from 70% in 2018, are engaging in CBDC work, with half looking at both wholesale and general purpose CBDCs, and 40% of central banks progressing from conceptual research to experiments, and another 10% developing pilot projects.
“As the world’s second largest economy, every move in China’s financial system will have a global impact, and digital currency is no exception,” the opinion piece said.
China’s Digital Currency Electronic Payment (DC/EP), offers arguably the most developed experiment of CBDC in an advanced economy, according to an August white paper commissioned by KPMG, Blockset and HashKey Capital.
Lin Rong, vice president of crypto giant Bitmain backed financial service platform Matrixport, said the entire central bank’s digital currency is progressing smoothly, and the recent domestic and international situation has also become a development boost.
“As a result of the reversal of globalization and the intensification of Sino-US conflicts, China at the national level also hopes that digital currency can be used as the next generation of financial infrastructure to partially alleviate the current monopoly of the US dollar system,” Lin said.
The People’s Bank of China (PBOC) has been researching and developing the digital currency since 2014. The State Council approved the PBOC’s digital currency development program at the end of 2017, together with some qualified commercial banks and institutions.
At the end of 2019, PBOC partnered with seven state-owned companies, including banks and telecom companies, to help with the DC/EP pilot phase.
In April, PBOC started testing its government-backed digital currency in some regions before it introduces it to the public. Pilot programs have been launched in Shenzhen, Suzhou, Chengdu, and the Xiong’an New Area, Hebei Province.
In August, China’s four major state-run commercial banks – Bank of China, China Construction Bank, Industrial and Commercial Bank of China, and Agricultural Bank of China – have started large-scale internal testing of a digital wallet app and are piloting the digital renminbi with the central bank in major cities, including Shenzhen, reported by China’s state-owned media CGTN.
In the next step, PBOC will continue to steadily advance the research and development of digital currency, and there is no timetable for the official launch of the digital currency, according to Sun Guofeng, head of Financial Research Institute at PBOC.
Yi Gang, Governor of PBOC, once stated that the development and application of legal digital currency is conducive to efficiently satisfying the public’s demand for legal currency under the digital economy, improving the convenience, security and anti-counterfeiting level of retail payments, and boosting China’s digital economy has accelerated development.
China’s issuance of digital currency will have a global demonstration effect, said Xi Junyang, a professor at Shanghai University of Finance and Economics.
“China is developing and issuing digital currency while other countries are not. So other countries may also consider doing that,” Xi said. “What’s more, now we have traditional currency, not official government-backed digital currency. So the development of digital currency will fundamentally change the composition of global currency.”
“If pilot programs are successful, going forward, China will enter a period of comprehensive promotion in the nation,” Xi said.