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China's digital currency pilots pick up pace

China's digital currency pilots pick up pace

China's digital currency plans are gathering pace, with trials taking place across four cities and reports emerging that big-name western players such as Starbucks and McDonald's are set to take part in testing.

China's official state news agency, Xinhau, says internal closed pilots of the digital yuan will be carried out in Shenzhen, Suzhou, Xiong'an New District and Chengdu.

The pilot, the latest stage of a People's Bank of China process going back to 2014, will see participants test a mobile app for storing and exchanging the digital currency to improve its functionality.

The PBoC stresses that the currency is still at the test phase but, in a hint on a possible launch timeline, cites the 2022 Winter Olympics, which will be held in Beijing.

Meanwhile, local news reports claim that banks, Ant Financial, Tencent and a group of merchants - including McDonald's, Starbucks and Subway - have met to discuss testing the currency.

Last year, PBoC deputy director Mu Changchun said the new digital currency would be similar to Facebook's Libra coin in design terms and would be eligible for use on major payment platforms and e-commerce networks such as WeChat, TenCent and AliPay.

Explaining the thinking behind the plan, Mu said: "It is to protect our monetary sovereignty and legal currency status." This chimes with a new report from research and campaign group Positive Money arguing that central banks should issue a digital version of cash to prevent the ‘privatisation’ of money.

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