The People’s Bank of China Has Approved the Use of Its Electronic Payment Platform for Digital Currency in Developed Regions
Recently, the People’s Bank of China (PBoC), China’s central bank, announced that it is ready to regulate China’s electronic payment platform for digital currency and that the system could go live in certain markets. China will be the first major economy to pilot fully digital payments at this scale.
The major cities authorized to participate in the platform’s trial include:
- Shanghai
- Beijing
- Guangzhou
- Hong Kong
The announcement also notes that adequately prepared rural areas may join the pilot program. The platform is scheduled for extensive real-world testing later this year during the 2020 Winter Olympics.
A New Electronic Payment Platform
With mobile payments through services like Alipay and WeChat Pay already the norm for many consumers, the rollout of the upcoming DCEP (Digital Currency Electronic Payment) could be relatively smooth for Chinese users.
Others may find switching payment systems challenging at first, but adaptation will likely be required. Because DCEP functions both as legal tender and as a payment system, merchants will be obliged to accept it as a form of payment.
Recent reports indicate the payment platform is not decentralized, yet many elements of blockchain technology have been integrated—such as smart contracts and cryptography—to improve the platform’s efficiency and security.
Yi Gang, Governor of the People’s Bank of China, said:
“The introduction of central bank digital currency helps meet the public’s demand for legal tender in the digital economy efficiently, improves the convenience, security, and counterfeit resistance of consumer payments, and accelerates the development of the country’s digital economy.”
A Well-Coordinated Effort
The emerging digital yuan is also being trialed in Shenzhen and other major cities.
During the pilot, users can create digital wallets to perform basic financial operations—withdraw funds, make payments, and transfer money only using a phone number, even without continuous internet access.
This solution not only competes with existing payment apps like Alipay and WeChat Pay domestically, but if adopted internationally it could also represent a potential alternative to systems such as SWIFT.
The chairman of the China International Economic Exchange Center commented:
“DCEP can achieve real-time tracking of data related to money creation and accounting, providing a useful reference for money supply management and the implementation of monetary policy.”