Shanghai held a raffle over the weekend, handing out electronic “red packets” worth nearly 20 million yuan, or about US$3 million, to residents as part of a digital currency trial by the country’s central bank.
According to Reuters, the city’s authorities gave away 350,000 red packets with 55 digital yuan, or e-CNY, each with the winners drawn this past Sunday.
Gifting red packets containing small amounts of cash is one of the oldest and most common traditions among the Chinese. These red packets are believed to bring good fortune and prosperity to those who receive them.
In this case, however, the giveaways were launched to support the People’s Bank of China’s (PBOC) pursuit to become the first major central bank to issue central bank digital currencies.
The push for digital currency is meant to modernise the domestic payment system, increasing its efficiency and lowering costs, former central bank governor Zhou Xiaochuan said last May. But there are still speculations claiming that this push is being done to internationalise the yuan and strengthen its global acceptance.
Analysts cited by Reuters added that the PBOC-issued e-CNY helps the government improve its watch over the economy and gain more control of data. The project could also reduce the dominance of Ant Group’s Alipay and Tencent’s WeChat Pay in online payments.
Similar trials were held in other major cities across the country, including Beijing, Shenzhen, Chengdu and Suzhou. Beijing’s raffle, which ran almost simultaneously with Shanghai’s, gave away 40 million worth of e-CNY, split into 200,000 digital “red packets” with 200 e-CNY each. Shenzhen’s trial gave away 20 million worth of e-CNY. Global Times cited a report saying that authorities have already given away over 150 million e-CNY since March 2021.
The winners can only use the cash from 11 June to 20 June 2021 in Shanghai and other cities like Suzhou where digital yuan trials are being run, at shops, malls, supermarkets, restaurants and hotels in the participating cities that accept digital yuan.
China is currently positioned as one of the leaders in the global race to launch central bank digital currencies.
Written by Kyle Chua