China Begins Digital Yuan Tests in Preparation for the Winter Olympics in 2022
China’s digital currency is currently undergoing extensive tests in preparation for the Beijing Winter Olympics scheduled for next year, the 21st Century Business Herald reported. While the digital yuan has initiated state-wide efforts to ramp up blockchain development, testing concrete projects has been somewhat lacking in the past several weeks.
The country’s Ministry of Commerce issued a notice regarding several ongoing pilot projects for digital yuan applications last week, announcing measures that will expand the use of the digital yuan. The document, titled “The Notice on Printing and Distributing the Plan for Deepening the Pilot Program for Innovation and Development of Trade in Services,” stated that all of the conditions were fulfilled for the digital yuan to be tested in more regions.
These regions, according to the document, include Beijing-Tianjin-Hebei, the Yangtze River Delta, the Guangdong-Hong Kong-Macao Greater Bay Area, and the central and western regions where there are ongoing pilot projects for the digital yuan. The Ministry of Commerce and the People’s Bank of China (PBoC) have formulated a policy that states the five regions where the digital yuan pilot projects will take place.
The so-called “4+1” regions include Shenzhen, Chengdu, Suzhou, the Xiongan New District, and Winter Olympics. All of the regions and their respective institutions will assist in the development and promotion of the digital yuan, the Ministry of Commerce said in the notice. However, the Ministry noted that they expect the application scenarios of the digital yuan projects to expand both to other services and other regions.
A high-up executive of a Suzhou bank revealed that the current digital yuan application projects conducted by financial institutions in Shenzhen and Suzhou are focused on small-scale scenarios “such as retail, transportation card recharge, and catering.” If the central bank and relevant financial institutions allow it, the digital yuan application might be extended to areas such as medical care, education, e-commerce, tourism, culture, etc. The source also explained that the upcoming digital yuan payment system has all of the characteristics of offline transfers, which means that there is no need to bind it with payment cards issued by banks. This could bring about much-needed stability for financial institutions dealing with digital yuan and improve security, transparency, and speed.
According to a report from the 21st Century Business Herald, the current pilot projects focusing on the digital yuan have all completed the top-level design. The projects have all passed standard formulation practices, with the better part of functional research and development now completed. The first internal closed pilot tests are set to be conducted in the following weeks in Shenzhen, Suzhou, Xiongan New Area, Chengdu, and most Winter Olympic venues.
The current work on the pilot projects focuses on testing digital yuan payments for transportation card recharge, retail, catering, and other small-scale payment areas.
The Suzhou bank official revealed that extensive internal stress tests are also being conducted. He explained that developers are currently testing out the limits of the scalability of the digital yuan network. While sources haven’t shown that there are any major problems with the network, developers have pointed out that it still doesn’t have the payment processing capability to support large volumes required by the tourism and e-commerce industries.