China’s digital yuan trials reportedly limited to small retail transactions

The People’s Bank of China (PBoC) announced that the test run of its central bank digital currency is currently limited to small retail transactions.

According to the Global Times on Aug. 24, the central bank has clarified some details regarding the recent digital yuan — also known as digital currency electronic payment, or DCEP — in order to address rumors regarding the scale and scope of recent pilot projects.

Per the report, some Chinese internet users claimed that a person in Shenzhen received a large amount of PBoC’s digital currency after selling local real estate. Wang Peng, an assistant professor of the Gaoling School of Artificial Intelligence at Renmin University said:

“At its current stage, the test’s primary goal is to ensure the digital currency’s operation runs smoothly and safe, and to determine how DCEP is distributed from the central bank to financial institutions. Only when trials in retailing are successful will they be carried out in large transaction scenarios,”

The rumors also stated that the digital yuan could not be converted into banknotes.

A PBoC employee answered by stating that the digital currency is legal tender in China and can be converted into banknotes at a rate of 1:1. 

As Cointelegraph recently reported, DCEP trials were expanded to include Beijing, as well as Tianjin and Hebei provinces.

Previously, it was known that the tests would be conducted in Hong Kong’s Greater Bay Area — a megapolis consisting of nine cities including Guangzhou, Shenzhen, as well as Hong Kong and Macau. It is also widely known that China had been conducting industrial-scale internal testing by state-owned banks of a digital currency wallet designed especially for its CBDC. 

While the launch of China’s digital currency seems to be particularly close, there are many details concerning its features and limitations that are not yet known to the public. As a Cointelegraph dedicated analysis illustrates, many questions remain unanswered concerning DCEP’s privacy, scope and utility.