China continues to spearhead efforts to implement a central bank digital currency (CBDC) after its digital yuan experiment expanded with a conversion feature across ATMs in Beijing, news agency Xinhua reported.
ATMs Allow Exchange between Digital and Physical Money
According to the media report, two major Chinese banks, The Industrial and Commercial Bank of China (ICBC) and The Agricultural Bank of China (ABC), implemented a feature across their ATMs to allow their customers to exchange the new CBDC for physical cash, with the option now available at more than 3,000 ATMs in the capital.
A CBDC is an electronic representation of a fiat currency, like the USD, the Euro, or in this case, the Chinese Yuan, equivalent to the physical one. It is centralized, issued and regulated by the central bank of the country. Unlike cryptocurrencies, CBDCs are not based on blockchain technology.
The report states that the ICBC, which alone operates more than 3,000 ATMs in Beijing is the first bank in the country to add full support for both deposits and withdrawals of the digital yuan, known as Digital Currency Electronic Payment (DCEP).
On its behalf, ABC added a similar feature to allow the exchange of digital yuan into a physical one and vice versa at around a dozen ATMs the bank operates in a major business and shopping area in the capital, the Wangfujing Street in the Dongcheng District.
China, a long-time proponent of a central digital currency, is continuing with its efforts to create public awareness for the digital yuan, pursuing its end goal to have its physical cash replaced by the CBDC.
In June, Beijing Local Financial Supervision and Administration Bureau announced a lottery for CNY40 million ($6.2 million) available to 200,000 of the city residents, with the lottery winnings payable in the digital currency.
Similar initiatives have already taken place in other major cities of the country, like in Shenzhen, China’s major tech hub, where in October 2020 a lottery distributed more than CNY10 million ($1.5 million) in winnings paid in digital yuan to around 50,000 city residents.
China even put authorities in the Special Administrative Region (SAR) of Macau under pressure for wider adoption of the digital yuan across the gambling hub. In April, a report surfaced that Macau’s top legislator informed lawmakers that the city’s government is going to collaborate with China’s central bank in order to “study the feasibility of issuing a digital currency.”
China is not the only country exploring the implementation of a digital currency as central banks across the world are toying with the idea to issue a digital version of their physical currencies and keep up with technological advances. Earlier this month, a report in Bloomberg published a warning from the European Central Bank that if the digital euro project is not given the green light to go ahead with practical experiments this summer, the ECB’s ability to fulfill its mandate as a lender of last resort may be affected.