The major Chinese city of Shenzhen is once again the testing site of the country’s Central Bank Digital Currency (CBDC), also known as the digital yuan, the city’s government said on New Year’s Eve.
According to the announcement, Shezhen is again giving its residents the chance to win a “red envelope” — a common way of gifting cash in China — in a 20 million digital yuan (around $3 million) giveaway. The lottery, which began on 1 January, will see 100,000 red packets distributed each of which is worth 200 digital yuan (around $30). Citizens of Shezhen will have until 4 January to register for the lottery through the “iShenzhen” platform.
Once chosen, the winners of the lottery will have until 17 January to spend their digital yuan’s at one of the 10,000 restaurants and supermarkets participating in the trial. Similarly to the city’s last digital yuan giveaway, once the 17 January deadline is reached, all unspent winnings will expire.
This giveaway is part of China’s ongoing real-life tests of its CBDC. The first such “lottery” was conducted last October, again in the city of Shenzhen, when the government was able to distribute around 8.8 million digital yuan to 47,573 lottery winners. That trial was followed by one in the city of Suzhou in December, which distributed almost $3 million to 96,614 lottery winners. The December trial also saw the participation of Chinese e-commerce platform JD.com, which accounted for more than 40% of the digital yuan consumption.
The Chinese Digital Currency/Electronic Payment (DC/EP) system is probably one of the CBDC projects closest to launch. 2020 saw numerous trials of the system, and according to a Bloomberg report, the digital yuan has already been used in over 4 million transactions, worth more than 2 billion yuan (around $300 million).