The city of Shenzhen in China will give away more than 10m yuan as part of trials of a new digital currency.
A new state-backed digital currency has been soft-launched in the city of Shenzhen and authorities have now begun giving away more than 10m yuan in a citizens’ lottery to see whether it can help revive consumer spending after Covid-19 and aid China’s efforts of creating a cashless economy.
According to The Guardian, almost 2m people have applied to take part in the lottery, with 50,000 set to be randomly selected to win a “red packet” worth 200 yuan (€25). Winners will be able to spend the digital currency at 3,800 designated shops in the district of Luohu when they download the Renminbi app.
The digital currency is backed by the state-run People’s Bank of China. A deputy governor of the bank, Fan Yifei, told a recent conference that it is looking at allowing people to pay using facial recognition scans. As part of its digital currency trials, Fan said the bank had processed 1.313m transactions to date, worth approximately 1.1bn yuan (€169m).
A cashless society
The currency was reported to be in the works in December last year when it was revealed China was to pilot digital currencies in Shenzhen and Suzhou. Plans for the currency date back as far as 2014 when it started as a research project to explore using a digital currency to cut the costs associated with circulating traditional paper-based monies and boost control of the money supply.
However, following the economic damage caused by the Covid-19 pandemic, authorities in China are reportedly eager to encourage a return to customer spending while also pushing towards the goal of becoming a cashless society.
Recent figures from Statista showed that in the first quarter of this year, more than 765m people in China completed at least one mobile payment. In 2019, more than 347trn yuan was transacted over mobile payments platforms – such as Alipay and WeChat Pay – up from 9.6trn yuan in 2013.