Central Bank of China to lead digital yuan adoption

China’s central bank digital currency (CBDC) will be trialled in Shenzhen in partnership with the Central Bank of China, the People’s Bank of China (PBoC), and two other state-owned banks, according to Chinese local news outlet Caijing.

Chinese officials have been keen to remain at the forefront of digital asset adoption and publicly announced their work on a CBDC earlier this year.

The latest report indicates that several state-owned banks and organisations will be pitted against each other in what PBoC officials call a “horse race” to see which organisation can adopt the best model for digital-yuan use.

As Coin Rivet reported last week, China has been proactively developing blockchain-based currencies since 2014.

It is hoped that a yuan-based CBDC would open up and facilitate new international trade corridors, which have historically been restricted due to the slow movement of funds.

A pilot for 2019

Despite initial reports that the CBDC would be released next year, it has since emerged that the organisations behind the new digital asset will be launching an initial pilot before the end of 2019.

Local Chinese media reports that four major banks will be participating in the pilot, including the Central Bank of China and the People’s Bank of China, in addition to major telecommunications operator Huawei.

It’s the first time that the digital currency will be tested outside of a closed testing scenario, with the CBDC entering real service scenarios for the banks’ customers.

Caijing has reported that the CBDC will be initially trialled in the transportation, education, and medical industries.

Huawei previously announced in early November that it planned to work with the People’s Bank of China to research digital asset integration.

The announcement, which was part of Beijing’s push for better financial infrastructure, came during Huawei’s commitment to delivering a “solid digital financial base” for its Chinese users.

It has been forecasted that China will spend $2 billion on blockchain development by 2023 after President Xi Jinping announced that blockchain is essential to the country’s future.

However, some critics have warned that Beijing could be pushing for a CBDC as a way to control and track the spending of its citizens, removing the opportunity for Chinese users to access permissionless currencies such as Bitcoin.