Now it’s official: China is the first industrial nation in the world to test its digital central bank currency DC / EP in practice. Jonas Groß on the current status of the CBDC project and the economic and social implications.China is a global pioneer in mobile payments. Studies in the metropolises of Shanghai, Beijing and Hangzhou show that the market shares of mobile payment methods amount to up to 60 percent (cash: 20 percent). Due to the widespread use of digital payment methods, it is hardly surprising that the Chinese Central Bank (PBoC) has also been dealing with its own digital currency – a so-called digital central bank currency (CBDC) – since 2014.
China’s CBDC: The test phase has started
Numerous Chinese banks, telecommunications providers and e-commerce companies such as Tencent and Alibaba are now testing the CBDC. In addition, 50 percent of the mobility allowance for civil servants is paid in digital form via their mobile DC / EP wallet. According to media reports, international companies such as McDonald’s, Starbucks and Subway are already testing the DC / EP. A second major test run is scheduled to take place during the 2022 Winter Olympics in Beijing.How exactly the test runs and how the DC / EP should ultimately be designed is currently still largely unclear. The information situation of the Chinese CBDC project is non-transparent compared to western CBDC projects. The published information comes only partially from the central bank itself, rather it is based on media reports or statements from cooperation partners.