China’s digital yuan is only being used to process small retail transactions, a central bank official has reportedly revealed. According to a local outlet, the official made the clarification following claims that the digital currency was used in a major real estate transaction.
China’s digital currency electronic payment (DCEP) has been on a test run, targeting small retail transactions as the market regulator gears up for nationwide rollout, the official reportedly claimed. As per a report by China’s English language newspaper Global Times, the official at the People’s Bank of China further revealed that the DCEP is accepted as legal tender and is two-way convertible with bank notes at a rate of 1:1.
The official was responding to online claims that the digital currency was recently used to settle a real estate deal in Shenzhen. Reports on Chinese social media platforms claimed that a resident had sold his property for the digital yuan, but had been unable to convert it into banknotes.
The DCEP has been in a testing phase in a few cities including Shenzhen, Suzhou, Chengdu and the Xiongan New Area in Hebei Province, the report revealed. The CBDC research unit at the PBoC has also been hiring aggressively, especially in Shenzhen, as it seeks to scale up the use nationwide.
China’s CBDC future relies on the success of the test phase, Wang Peng, an assistant professor at the Renmin University told the Global Times.
He remarked, “At its current stage, the test’s primary goal is to ensure the digital currency’s operation runs smoothly and safe, and to determine how DCEP is distributed from the central bank to financial institutions. Only when trials in retailing are successful will they be carried out in large transaction scenarios.”
China’s CBDC has been widely anticipated and could usher in a new era of state-backed digital currencies. Other major global powers including the U.S., have cited China’s exploits as the key reason they have begun exploring CBDCs of their own as they seek to keep up.