China is testing CBDC in the public transport system
China is successfully conducting the second stage of testing its own digital currency. It is already possible to pay with Chinese CBDC in public transport in Guangzhou. Read more about the second stage of testing the digital yuan in this article.
CBDC is the central bank’s digital currency, a token that is directly tied to the country’s national currency. Officially, the development of China’s digital currency (e-CNY) began in December 2019, although the People’s Bank of China claims that developments started as early as 2015. The first testing stage went pretty well, with the e-CNY showing promising results at the 2020 Olympics.
The Chinese government has been consistent in implementing its digital currency. As part of the fight against Covid-19, an agreement was made with one of the leading food delivery companies in the PRC, Meituan. More than 6 million users paid for the company’s services using e-CNY. The amount of trade totaled $131.6 million (data as of June 20).
The second stage of testing began in Guangzhou. The national token can be used to pay for public transport fares. The idea is simple: install the e-CNY app and top up your balance. This makes it possible to pay for transportation services at the ten hub bus stations. To do this, it is necessary to scan a QR code at the stop in the app itself.
The same experiment has been conducted in the city of Ningbo but on the subway lines. The payment mechanism doesn’t differ from the one in Guangzhou.
Matthew Graham, head of Sino Global Capital, said that e-CNY should compete with the U.S. dollar, given how obsolete payment systems such as SWIFT are. But that doesn’t mean holders of bitcoin or other cryptocurrencies need to worry.
That’s not the only reason for the possible rise in popularity of China's CBDC. According to many experts, the partial anonymity of China’s national token will allow many countries, such as Iran, to circumvent U.S. sanctions. Chinese authorities noted that it would not impede the tracking of financial terrorism and money laundering.
