(Kitco News) - The government of China launched a concerted effort to promote the use of its central bank digital currency (CBDC), the digital yuan, during the recent Lunar New Year celebration in a bid to help increase the adoption of the e-CNY.
According to a report from the Global Times, there were almost 200 digital yuan-related activities launched during the Spring Festival across the country that saw more than 180 million ($26.6 million) of the digital fiat passed out to citizens in various forms, including subsidies, consumption coupons and other programs.
Integrating the e-CNY into the New Year celebration across China has become a point of focus for the Chinese government, which first began the practice last year during the first major Spring Festival holiday in the country following its optimization of COVID-19 prevention measures.
Aside from helping to increase the uptake and use of the e-CNY, some local governments also used the digital currency to help provide a boost to the economy, which had been hard hit by the pandemic and the strict lockdown measures implemented by the government.
All manner of businesses participated in the digital yuan consumption promotions, including mobile providers, supermarkets and tourism companies. In one example cited by the Global Times, the local government inShenzhen handed out over 100 million yuan ($14.7 million) worth of e-CNY to subsidize the city’s catering industry.
While the rate of adoption for the e-CNY has been slow up to this point, officials noted an increase in demand over the latest Spring Festival period, with the government of Hangzhou in Eastern China’s Zhejiang Province reporting that the digital yuan they distributed was taken up by residents within nine seconds of its release.
Activity related to the digital yuan has been ramping up in recent months. In early January, the People’s Bank of China (PBoC) included the e-CNY in its official cash reports for the first time, with the digital fiat accounting for 13.61 billion yuan (roughly $2 billion) in circulation. That figure represents roughly 0.13% of the 10.5 trillion yuan in circulation at the end of December.
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Last week, the PBoC released an update indicating that the central bank plans to continue expanding the e-CNY pilot program to allow for additional testing and exploration of the possible applications of a digital RMB throughout the country and to “realize the interconnection between the digital renminbi system and traditional electronic payment tools.”
And on Tuesday, the Chinese city of Suzhou released a plan aimed at transforming the city into a hub for metaverse development and innovation. As part of its plan to reach this goal, Suzhou is looking to entice at least 200 companies focused on creating virtual reality technology to establish their base in the city by 2025. Officials in the senior ruling party also set a tentative key performance indicator of 2 trillion yuan ($300 billion) worth of e-CNY transactions in the city by the end of 2023.
