Suzhou City Getting Ready for Chinese CBDC Test
Suzhou will become the second Chinese city after Shenzhen to experiment with the country’s sovereign digital currency on Dec. 12, according to the report. The city located in Jiangsu Province of East China will play host to a shopping festival dubbed “Double 12” and gauge the DCEP’s feasibility following its earlier trials in Shenzhen.
According to local news reports, the form of the wider trial in Suzhou will be similar to the one that was carried out in Shenzhen in October, where about $1.5 million in digital yuan was given out to 50,000 residents as “red packets” via a lottery.
Many businesses in Suzhou’s Xiangchen district have already been installed with point-of-sales tech with near-field communication (NFC) in preparation for the event. These establishments will also have QR code capabilities that will allow lottery winners to spend their digital yuan winnings.
Merchants will be charged extra fees in the future
There are two steps for Chinese digital yuan’s issuance: first, China’s central bank issues the digital currency, then designated operating agencies participate in the operation and distribute the digital yuan to the public.
All commercial banks and non-bank payment institutions can create a digital yuan wallet based on the digital yuan app to provide customers with daily payment services and charge users with appropriate fees.
Digital yuan may replace traditional currency as much as possible in the future
The user information and transaction data of digital yuan will be concentrated in the central bank. At the same time, in the financial system, the basic accounts of the central bank and the business accounts of commercial institutions coexist and link with each other. In this way, digital yuan can replace all traditional currencies as much as possible, not only cash, but also allowing commercial banks to issue loans and purchase bonds, all businesses can be handled with digital yuan.
Besides, the limited anonymity beyond the central bank is implemented for digital yuan, that is to say, in addition to the investigation of illegal transactions by government departments within the scope of authority, merchants and third-party payment platforms have no right to obtain the payment data of users.