Has China’s digital currency gone into public beta?

WeChat was suddenly flooded with screenshots of the digital yuan today. A downloadable app was also released.

Screenshots of what appears to be China’s upcoming digital yuan flooded WeChat today. The digital currency appears to be part of a trial being conducted by the Agricultural Bank of China, or ABC. The bank, one of the country’s biggest, is not particularly tied to agriculture, but it is among four banks that the People’s Bank of China tapped to be part of the beta rollout of the currency.

Matthew Graham, CEO of Sino Global Capital, broke the news, as well as images of the currency, on Twitter. “Americans still trying to figure out if they should put on a face mask while China pushes out a revolutionary technology,” he tweeted.

United States: should we defund the post office

China: should we adopt a next-generation digital currency

— Matthew Graham (@mattysino) April 14, 2020

“As we understand it, the DCEP project has reached the next phase of testing,” Graham, an American who lives in Beijing, told Decrypt. “Specifically, the testing is with the Agricultural Bank of China, and we are told in four pilot regions.” The regions are Shenzhen, Xiongan, Chengdu, and Suzhou, he said.

How coronavirus relief could speed up the launch of China’s digital yuan

The app is available for download here. The version that is circulating is designed for the ABC. Specifically, it is designed for whitelisted customers in the four pilot regions, Graham said on Twitter. (To install the app, users need to give the ABC special security permissions though, he said.)

DC/EP original pics, installation and interface*

Direct link for installation: https://t.co/6WGFstyMAe

*need to be on whitelist to register
**not sure if geofenced pic.twitter.com/sN7oa9P94F

— Matthew Graham (@mattysino) April 14, 2020

What is the digital yuan?

DCEP stands for digital currency/electronic payment; otherwise known as China’s central bank digital currency. A team within the People’s Bank of China has been silently working on the project for five years. And while the central bank has been typically vague and secretive about the work, rumors have been swirling for months that a launch was imminent.

The app is a fairly straightforward implementation, which includes a wallet and a way to transfer the digital currency, with a QR scanner. Graham explained it uses NFC technology, possibly useful for rural or unwired areas. “First impression is that the app looks slick, it’s a pro job in the Silicon Valley tech sense,” he said.

Why were the images leaked?

According to crypto circles on WeChat, citing an official from the ABC, commercial testing of the currency is set to begin in shopping malls in Chengdu.

Back in December, Caiing reported that the People’s Bank of China expected to launch a pilot of its digital yuan starting in Shenzhen and Suzhou. The pilot project, it said, would be led by the PBOC along with four major state-owned banks: the Industrial and Commercial Bank of China, Bank of China, China Construction Bank, and the ABC, along with three telecoms: China Telecom, China Mobile and China Unicom.

It’s unclear why the images apparently started circulating so late at night in China. The leaked images show the currency interface and give instructions to download the app. Users in the US said they’ve had trouble getting it to work.

Is this a real pilot?

John Kiff, a senior financial sector expert at the International Monetary Fund, told Decrypt that he believes it is more likely a proof of concept.

“When I hear the word ‘pilot’ I immediately question whether it’s really a pilot,” Kiff told Decrypt. “Uruguay was a real pilot and so is the Bahamas Sand Dollar, because they’re real live tests with real people. But others who announce pilots I suspect are launching what I’d call more like proofs of concept, involving simulated agents or very limited populations. I suspect that the PBOC has done the latter types of pilots,” he said.

Functionally, the app overlaps significantly with Tenpay (Tencent’s WeChat Pay), Alipay, and other mobile payment schemes that are commonplace in China—and that’s likely the point. Graham said that top goals for the digital yuan likely include “more granular data and control over the economy, wrestling power back from Tenpay and Alipay, and using it for international payment reconciliation in an attempt to undermine U.S. dollar hegemony.”