Report: China's central bank to test digital currency in two cities, partnering with state-backed commercial banks and telecom giants

Quick Take

  • China’s central bank will soon test its digital currency in the cities of Shenzhen and Suzhou, per Chinese news site Caijing
  • Four state-owned commercial banks are racing to find the best implementation strategies of digital currency, in collaboration with three telecom giants in China
  • The central bank is said to have accelerated its digital currency program, prompted by Facebook’s Libra project 

The People's Bank of China (PBOC), the country's central bank, will soon test its much-anticipated digital currency electronic payment (DC/EP) in the cities of Shenzhen and Suzhou, according to a report from Chinese financial news outlet Caijing.

According to the report, PBOC has partnered with seven state-owned companies to roll out the test. including four commercial banks and three telecom giants. Citing a person close to the pilot program, Caijing said the central bank has launched a "horse race"  among these commercial banks, encouraging them to come up with their own implementation strategies. 

The pilot program will concentrate on industries such as transportation, education, commerce, and medical care. While some banks chose to collaborate with telecom firms to develop SIM cards with built-in digital wallets, others have built their independent wallet apps. 

The Shenzhen pilot program will be carried out in two phases, according to Caijing. After a small-scaled testing period at the end of this year, DC/EP will be widely promoted in the city in 2020. Meanwhile, the city of Suzhou may test the new currency as well, according to the report. It was reported in November that a PBOC-backed fintech company was looking for blockchain and encryption experts in Suzhou. The fintech firm, founded by the PBOC's digital currency research institute, is said to be responsible for the research and development of DC/EP, as well as offering support for testing the new currency. 

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