The People’s Bank of China has approved the deployment of its Digital Currency Electronic Payment platform in developed regions
Recently, the People’s Bank of China (PBoC) announced it is ready to regulate China’s Digital Currency Electronic Payment platform, and is allowing it to go live in some markets. China will be the first major economy to experiment with fully digital payments on this scale.
Major cities that are allowed to work with the platform include:
- Hong Kong
The announcement also mentioned rural regions could participate in the pilot program if they are qualified. The platform will also be extensively tested in realistic scenarios during the winter Olympics 2020 later this year.
A new electronic payment platform
With mobile payment through Alipay and WeChat Pay becoming the norm for most people to conduct transactions, the adoption of the upcoming DCEP could potentially be much easier for Chinese citizens.
For others, switching from one payment system to another could be hard, but they may have to get used to it. As the DCEP will act as both a legal tender and a payment system, it means stores will not be allowed to refuse payment from DCEP.
Recent reports state that the payment platform is not decentralised, but many aspects of blockchain technology were implemented such as smart contracts and cryptography, to ensure efficiency and security of the platform.
The People’s Bank of China governor Yi Gang shared:
“The roll out of central bank digital currency is conducive to efficiently satisfying people’s demands for legal tender under the digital economy, to improving the convenience, security and anti-counterfeiting level of retail payment, as well as accelerating development of the country’s digital economy.”
A well-coordinated effort
At the same time, the up and coming Digital Yuan is also being tested in Shenzhen and other major cities.
The trial allows people to create a digital wallet, which they can use to perform basic financial operations such as withdrawing money, making payments and transferring money with a phone number only – no internet required.
This not only rivals existing payment apps such as Alipay or WeChat pay, but could also pose a potential rival against the US counterpart, SWIFT, if it is used internationally.
The chairman of China International Economic Exchange Center commented:
“DCEP can achieve real-time collection of data related to money creation, bookkeeping, etc, providing a useful reference for the provision of money and the implementation of monetary policies.”