China's new digital yuan test shows it can be programed to confine utility

Quick Take

  • The free e-CNY will arrive with a pre-programed utility for covering fees from subway, bus tickets or shared bike services.
  • It appears to be the first time that the Chinese government is testing the e-CNY’s programability to limit its usage to specific purposes.

Chengdu is kicking off its second giveaway campaign of the China's central bank digital currency (CBDC), dubbed the digital yuan or the e-CNY, but with a notable difference this time.

The Chengdu government said in an announcement on Friday that it is issuing 12 million e-CNY — worth around $1.85 million — through a lottery to 100,000 residents as part of the ongoing CBDC test. This comes months after the municipal government started its first giveaway campaign of 40 million digital yuan in February. 

But instead of issuing free digital yuan to lucky citizens that they can use wherever the e-CNY payment is supported, the latest test comes with a theme called "low carbon summer transportation" that gives away the e-CNY as allowances to encourage citizens to take more public transportations.

As such, the free e-CNY will arrive with a pre-programed utility for paying for subway and bus tickets through Chengdu's Tianfutong mobile app or for shared bikes on the Meituan mobile app. 

Specifying conditions for using the e-CNY

This appears to be the first time that the Chinese government is testing the programability of the e-CNY, which is a technology advancement on traceability and ensuring a certain fund in the e-CNY form can only be spent on intended purposes.

According to the government's blog post, local residents can register for the lottery starting from July 3 and choose either a "subway+bike" or "bus+bike" package.

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