At the end of the weekly trial of the Chinese Digital Yuan, many users believed that it was nothing different from other online payment applications.
Many world central banks are committed to adopting their own central bank digital currency (CBDC). Though many reports over the past year indicated that China was leading the way in this game, the result was largely theoretical.
However, last week it became known that the Shenzhen government had provided 50,000 yuan worth of digital currency worth 10 million yuan (about $1.5 million) in lottery ticket form.
After downloading the specified application, users were able to receive and use the Digital Yuan at more than 3,000 merchants in the area. This is the first significant practical use of digital currency.
According to Reuters, the results came to light after a week of testing yesterday. The general conclusions of most of the users show that the application and digital currency work similarly to existing online payment applications like Alipay and WeChat Pay.
Zhao Bin, a senior economist at PwC China, said the central bank and the Chinese government must invest “heavily” in education, marketing and applications to increase adoption of the Chinese digital currency. He added that it is especially important that the digital Yuan have convenience and other benefits to differentiate the digital currency from other applications.
Is the Digital Yuan a Global Game-changer?
Although users have drawn pessimistic conclusions, the real-life applications of China’s digital currency have put on edge other global superpowers such as the United States.
The Digital Yuan works outside of the existing financial infrastructure. The report, therefore, emphasizes that western countries are increasingly concerned that the Digital Yuan, once it reaches international levels, could undermine the dominance of the US dollar as the most widely used global payment currency.
Raymond Yeung, China’s chief economist at ANZ, said the government will prioritize the use of the digital currency as it will allow authorities to closely monitor currency flows.