China’s digital currency will soon be rolled out in three new regions in the country: the Beijing-Tianjin-Hebei region, Yangtze River Delta, and the Greater Bay Area, according to a Ministry of Commerce document.
Why it matters: The Digital Currency/Electronic Payment (DCEP), China’s digital yuan, will be the world’s first sovereign digital currency, and its rollout is gathering momentum. The new pilot regions include some of the country’s most developed financial hubs like Hong Kong and Shanghai.
Details: DCEP has already been trialed in Shenzhen, Chengdu, Suzhou, and the Xiongan economic zone near Beijing. China’s central bank will expand trials of the digital currency in Beijing-Tianjin-Hebei region, the Yangtze River Delta, and the Greater Bay Area region, according to a Ministry of Commerce document, likely before the end of the year. Further expansion into “central and western areas” are contingent upon meeting certain conditions, which is not identified in the document.
- The Ministry of Commerce document stated (in Chinese) in the overview document that the new measures should be completed by the end of 2020. Many cities in the three new pilot regions are likely to test DCEP before the new year.
- The three new pilot regions incorporate economic heavyweight cities: The Greater Bay Area (GBA) has a $1.5 trillion dollar economy and includes Hong Kong, Shenzhen, and Macau; the Yangtze River Delta region includes Shanghai’s $248 billion GDP as well as Nanjing, Hangzhou, and Suzhou.
- The DCEP will have the same value as the yuan, and will work with existing mobile payment providers like Alipay and Wechat Pay. Unlike other anonymous cryptocurrencies, it will be regulated by the central bank.
Context: The DCEP has been a work in progress for at least five years as China aims to create its own national digital currency.
- Earlier this month, several Chinese banks including the Agricultural Bank of China, Industrial and Commercial Bank of China, China Construction Bank, and Bank of China began using the digital yuan.
- In July, Beijing released a detailed plan on how to integrate blockchain technology into sectors like logistics, cross-border trade, and e-governance.