Popular fast-food chains like McDonald’s, Starbucks, and Subway are said to be among a group of 19 participating retailers testing out China’s proposed central bank digital currency (CBDC).
The news is the latest development in the country’s plan to roll-out a digital currency electronic payment system (DC/EP).
Meanwhile, the ongoing COVID-19n pandemic appears to be accelerating the pivot towards contactless electronic payment systems as countries look to combat the spread of the virus. Several countries are also reportedly working on modalities for the creation of their own sovereign digital currencies.
Xiongan CBDC Testing to Focus on Restaurants and Retailers
According to a report by Chinese media outlet InterChain Pulse, officials of Xiongan are set to initiate a pilot test of the country’s planned CBDC. As previously reported by Blockonomi Xiongan is one of four cities where preliminary trials of the DC/EP are set to take place.
As part of the test, the city council reportedly invited 19 retailers including fast food and restaurant giants like Subway, McDonald’s, and Starbucks. Other participants include JD Supermarket and Qingfeng Baozi — one of China’s largest dumpling makers.
Xiongan’s proposed testing of the CBDC will center around its use in the retail ecosystem, hence the decision to limit the participating pool to restaurants, entertainment centers, and retail outlets. The city has a history of supporting technological developments with the government setting up a Smart City Federation back in September 2019.
The city is reportedly also looking to be a leader in leveraging emerging technologies like blockchain, 5G, artificial intelligence (AI), and internet of things (IoT) among others.
Earlier in the year, the Xiongan Blockchain Lab was launched to create a unified infrastructure for the development, testing, and integration of distributed ledger technology (DLT) protocols in the city.
While Xiongan focuses on the retail aspects of the DC/EP rollout, other Chinese cities and reportedly exploring the utilization of the proposed CBDC in different use cases. For example, the testing in Suzhou appears to be geared towards transportation subsidies as Chinese authorities look to work out the kinks in its sovereign digital currency.
China’s Central Bank Digital Currency Progress
These tests already involve the use of a mobile wallet app for the DC/EP with the Agricultural Bank of China already developing a test interface to demonstrate how the CBDC can be used in monetary transactions. The rollout of these testing protocols comes following reports that preliminary developmental work on the project was already completed.
China has been working on a sovereign digital currency since 2014 but activities appeared to pick up pace in 2019 following the emergence of Facebook’s Libra payment project. Authorities in Beijing joined a stream of opposition from across the globe against the private digital currency project with regulators pointing to monetary control risks.
The outbreak of the COVID-19 pandemic reportedly slowed down progress on the CBDC but reports indicate that more than 80 patents have been filed by several participants in the DC/EP project.
Apart from China, other countries are also exploring the need for a sovereign digital currency. In Asia, lawmakers in Japan have called on the government to be alive to the potential disruption of a digital yuan and respond with a digital yen.
So far, the country’s central bank says there is no need for a Japanese CBDC but the country will be ready to issue one if the need arises.
Elsewhere, countries like France and Germany have also called on the European Union (EU) to consider a CBDC for the region to counter both Libra and China’s DC/EP.