China’s digital yuan, known as DCEP (digital currency electronic payment), will be rolled out for testing in South China’s Greater Bay Area (GBA), as announced in a televised meeting of the People’s Bank of China earlier this week.
GBA consists of nine Chinese mainland cities (Guangzhou, Shenzhen, Huizhou, Dongguan, Zhuhai, Zhongshan, Jiangmen, Foshan and Zhaoqing) and two special administrative regions (Macao and Hong Kong).
DCEP has garnered much attention this year as the People’s Bank of China has rolled it out for beta testing in cities across the PRC. Head of the digital currency department at the People’s Bank of China, Mu Changhun, defined DCEP as “having the exact same functions as cash, only in digital form.” The new digital currency will allow for payment in all trading scenarios, help prevent money laundering and may possibly lead to the phase-out of paper currency.
Data from the People’s Bank of China’s Guangzhou branch revealed that 4.5 billion mobile payment transactions occurred in Guangdong during the first quarter of 2020, with a total transaction volume of nearly RMB12 trillion. The figures show an upward trend in mobile payments, with 37.97% growth year-on-year in the number of transactions and a 16.35% increase in transaction volume in three consecutive years. A prosperous province, Guangdong is a crucial market for the central bank to launch DCEP.
He Xiaojun, director of the Guangdong Financial Supervision and Administration Bureau, said that the province will play a significant role in the cross-border development of the digital currency. He said, “Guangdong will further encourage innovation, deepen business integration with Hong Kong and Macao in virtual banking and other aspects… The use of digital currency scenarios allows modern financial technology to better serve the construction and development of the entire Greater Bay Area,” as cited by Southcn.com.
Moreover, financial analyst Xiao Lei believes that Guangdong is a crucial market during the digital currency’s early stages, due to its large population base and extensive foreign trade. In many officials’ opinions, Guangdong has a natural advantage when it comes to the use of digital currency.
In light of ongoing blockchain developments, Wan Xiang blockchain company CEO Xiao Feng noted in a speech given at the 2020 Blockchain Technology and Application Summit that the third developmental stage of blockchain will require the total implementation of digital currency. Xiao stressed the urgency to launch DCEP in the Greater Bay Area.
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