Chinese citizens can now convert the Digital Yuan into Cash through the Industrial and Commercial Bank of China (ICBC), which has become the first bank in China to allow such transactions.
The state-owned bank launched a feature on Friday 18, in partnership with the Agricultural Bank of China that will allow users to withdraw their Digital Yuan in the form of cash in over 3,000 ATMs spread across China’s capital city Beijing. The Agricultural Bank has over 10 ATMs in Beijing all of which can also exchange the digital renminbi and cash.
The move is another key step forward which puts China even further ahead on the world stage as the first country to successfully launch and integrate a central bank digital currency.
China’s Digital Yuan Is a Monitoring Tool
The Digital Yuan project officially known as the Digital Currency Electronic Payment (DCEP) was publicly announced in 2019 by the country’s central bank, the People’s Bank of China as an initiative to rewire both the countries and the global economic system through financial emerging technology.
So far, DCEP has proven to be a leading practical case of how governments can leverage blockchain-based technology to create digital versions of their central-bank-issued currencies. In 2020, China conducted various tests on DCEP by issuing civil servants in various regions with the digital Yuan in collaboration with different banks in the country.
Furthermore, the PBOC has partnered with other central banks including in the UAE, Hong Kong, and Thailand in a joint initiative to conduct more research on the financial application potential of Distributed Ledger Technology (DLT). This development fell under the country’s five-year goals which include advancing digital currency research and development.
Despite the success of the project, China has been criticized for alleged intentions of using the digital Yuan to monitor its citizens and impose even more restrictions on its citizens, while planning to carry the model outside of China, and dominating the dollar.
DCEP has already been integrated with China’s biggest electronic money transfer service AliPay and it is expected that tourism will be the first and most efficient channel to bring DCEP to the world. The government will also be able to track and monitor the financial activities of Chinese Citizens outside of China.
Ongoing DCEP Trials in Beijing
The PBOC announced in early June that it will hand out 40 million renminbi ($6.2 million) to its citizens residing in Beijing via a lottery co. Each citizen would be awarded 20,000 red packets each containing 200 Yuans (about $31), to be spent through selected merchants across the city.
According to a statement by the deputy governor of PBOC, the country is also planning to expand the scope of the trials to include foreigners in the trials, particularly during the 2022 Beijing Winter Olympics.