The People’s Bank of China (PBOC), the country’s central bank, will soon start testing in major cities its much-anticipated digital currency electronic payment system known as DC/EP, financial news outlet Caijing reported on Monday.
Why it matters: China’s DC/EP plan has been in the works for five years, and its central bank could be one of the first in the world to issue a digital currency system for wide-scale adoption.
- This is not the currency’s first test. The country rolled out a pilot nearly three years ago in conjunction with commercial banks such as the Industrial and Commercial Bank of China (ICBC), Bank of China, and Tencent’s internet bank WeBank.
Details: The tests will include using real-world scenarios in applications such as transportation, education, commerce, and healthcare, according to Caijing. State-owned enterprises will operate the pilots taking place in major cities including Shenzhen in southern Guangdong province and Suzhou in eastern Jiangsu province.
- China’s “big four” state-owned commercial banks (ICBC, Bank of China, China Construction Bank, and the Agricultural Bank of China) and the “big three” network operators (China Telecom, China Mobile, and China Unicom) will conduct the tests.
- Partner banks will have the liberty to choose their own pilot scenarios.
- The Shenzhen pilot program will be carried out in two phases—a small-scale testing period at the end of this year followed by a city-wide pilot in 2020.
Context: China has been eager to push forward its digital currency plans.
- In August, China included the research and promotion of virtual money and the country’s digital fiat currency in the newly released guideline for the Shenzhen Special Economic Zone.
- In November, Chinese media reported that fintech firm Yangtze River Delta Financial Technology, founded by the central bank’s Digital Currency Research Institute, was recruiting blockchain and encryption experts in Suzhou. The firm provides support for the development and testing of DC/EP.
- In the same month, the Digital Currency Research Institute partnered with Chinese telecommunications equipment maker Huawei.