Digital yuan application scenarios in SZ exceed 1M

The digital yuan, or e-CNY, has gradually become an integral part of more Shenzhen residents’ daily life. By the end of this August, the city had recorded 1.05 million digital yuan application scenarios, with some 26.71 million digital wallets being opened and the cumulative transaction value hitting 18.4 billion yuan (US$2.65 billion), Shenzhen Special Zone Daily reported, quoting the central bank’s Shenzhen branch.

The digital yuan is a digitized version of the physical yuan and is backed by yuan deposits held by the central bank.

A consumer scans a QR code to pay with the digital yuan. File photo

The “mystery” of the digital yuan was unveiled when Shenzhen initiated the country’s first externally controllable pilot program in October 2020, doling out 10 million yuan worth of digital currency to 50,000 people through a lucky draw as part of the city’s efforts to spur consumption during the regular COVID control and prevention. Each “red packet” contained 200 yuan and the lottery winners were able to use the electronic currency at over 3,000 stores in Luohu District.

The “red packet model” was later adopted by other pilot cities in China, laying a good foundation for the country’s digital currency R&D.

Statistics show that by the end of August 2022, Shenzhen had launched six rounds of large-scale e-CNY consumption promotion activities, investing some 105 million yuan to boost offline consumption during the normalization of epidemic prevention and control. Authorities in Luohu, Futian, Longhua, Nanshan and Qianhai had also innovated the use of digital yuan and issued 616 million yuan in special funds to 2,422 small and micro enterprises on a trial basis, improving the efficiency of fiscal capital flow and effectively facilitating the implementation of the government’s COVID relief measures.

Shenzhen kept exploring innovative practices to push for e-CNY’s wider use and in 2020, the city had achieved full coverage of digital yuan payment in public transport. At present, the city’s digital yuan ecosystem has become increasingly complete, with its scope of pilot projects expanding and its application scenarios highly enriched.

Apart from its use in retails, the city’s use of digital yuan is also promoted to better serve the real economy and provide financial solutions to solve the practical socio-economic development problems.

This May, Shenzhen launched the country’s first advance payment platform based on digital yuan smart contracts, aiming to better protect consumer rights in the education and training industry. Unlike the traditional prepayment modes, the digital yuan system manages individual funds and pays a training institution each time a pupil has a lesson. The prepaid training fee belongs to consumers unless the pupil takes the lesson. Ten leading education and training institutions have so far established their presence on the platform.

Under the traditional prepayment modes, prepaid money is owned by businesses and placed in their accounts at commercial banks, potentially putting consumer rights at risk.