Chinese Central Bank Makes it Official: Digital Fiat Tests to Begin

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Tim Alper

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Tim Alper

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Tim Alper is a British journalist and features writer who has worked at Cryptonews.com since 2018. He has written for media outlets such as the BBC, the Guardian, and Chosun Ilbo. He has also worked...

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June 26, 2023 06:55 EDT

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The Chinese central bank, the People’s Bank of China (PBoC), has officially confirmed a number of digital currency testing reports – and has indicated that testing will soon begin in the country’s capital, Beijing.

The PBoC has also rushed to insist that a digital yuan rollout will not spark inflation in the Middle Kingdom.

The PBoC’s move was the bank’s first recognition of stories that have been circulating since late last year, claiming that two test sites – the cities of Shenzhen and Suzhou – had already been earmarked. Last week it emerged that two further cities, Xiongan and Chengdu, were now also part of the expanding digital yuan testbed.

The central bank’s announcement made via state-owned news agency CCTV, confirmed all four testbed sites, and went a step further, stating that “the site of the forthcoming Winter Olympics” – presumably Beijing’s Bird’s Nest national stadium and the Yanqing District of the capital – will also see digital yuan testing in the weeks ahead.

Media outlet UDN, however, claims that this could also incorporate Zhangjiakou, in Hebei Province, which will host some of the biggest showpiece snow events of the games.

The move is the clearest indication yet that the Chinese government hopes to have its digital currency up and running in time for the international flagship event – which will kick off in February 2022.

The PBoC urged the public to bear in mind that tests were still preliminary, and that an issuance had not yet been made.

A PBoC researcher told the news agency that the tests were still “closed” in nature, and added,

“Testing will not affect the commercial operation of government institutions. Nor will they affect existing [fiat] issuance and circulation systems, financial markets and economy. The effects will be contained within the testbed environment.”

As previously reported, the state-owned Agricultural Bank of China is believed to have rolled out a test wallet app for the digital yuan, which will be used to partially fund transport subsidies for public sector workers in the city of Suzhou in May.

The PBoC also confirmed that individuals and merchants will be able to carry out wallet-to-wallet transactions using the digital token – without the need for intermediary bank activities, and added that the token would be usable in “offline” scenarios.

The central bank added that to prevent “overselling” and any resulting inflation, participating institutions will be required to provide 100% reserve funds to the PBoC – in effect, underpinning the digital token with conventional fiat.