China has opened a Central Bank Digital Currency (CBDC) focused industrial park in the Luohu district of Shenzhen on October 11.
The government has launched the park to bolster the e-CNY ecosystem and payment solutions using the digital yuan. Residents are incentivised to move to the park for up to three years of free rent and loans. Commercial banks are being offered up to 20 million yuan to settle there, and start ups are offered up to 50 million yuan.
The park had nine residents as of its launch, including payment card companies Hengbao and Wuhan Tianyu Information, and payments processor Lakala Payment.
The move marks China’s development of CBDCs as a monetary tool. According to Reuters, Lu Lei, deputy administrator for the State Administration of Foreign Exchange (SAFE), stated that CBDCs has “programmable attributes” that can allow them to be used as a M2 currency, rather than just in circulation as a M0 currency as it is now.
Lei continued that the People’s Bank of China is likely to conduct further research into the uses of CBDC in the macro-economy with features such as adjustable rates, expiration dates, and control of where CBDCs can be used. Lei stated that the development could make cross-border transactions safer, faster, and more accessible.