(ATF) Chinese e-commerce company JD.com Inc said it would become the country’s first online shopping platform to accept the People’s Bank of China’s digital currency.
Electronics retailer Five Star Electric, JD Home, and JD Convenience Store – all units of JD.com – would support payments through the digital yuan, the online platform said in an announcement at the weekend.
Residents in the pilot project in Suzhou, Jiangsu province, will be able to pay bills using the digital currency. “In addition, JD.com and the Xiangcheng district of Suzhou have jointly created a digital renminbi payment option,” JD.com said in a statement.
“Citizens whose delivery address is in Xiangcheng District can choose to use digital renminbi payment in cash-on-delivery options.”
A JD.com unit, JD Digits (JDD), and the PBoC – the country’s central bank – plan to give away 20 million yuan to trial participants. Each person would receive 200 digital yuan and the 100,000 recipients would be selected through a lottery.
Suzhou is the second major trial of the digital currency. The PBoC had earlier issued 10 million yuan worth of digital currency to 50,000 randomly selected consumers in Shenzhen, the southern boom city adjacent to semi-autonomous Hong Kong.
Digital giveaway
Analysts believe the Shenzhen trial was the first time a major central bank has created money and handed it out to random households.
“Although the amounts received by households were small and the central bank did not have an explicit mandate for the exercise, the potential implications for a new form of targeted monetary policy were clear,” said Geoff Yu, credit strategist at BNY Mellon.
He said the Shenzhen and Suzhou programmes are primarily “information-gathering” exercises for central bankers. “The PBoC is probably content to simply observe the household response to the digital renminbi and let usage grow organically,” he said.
One major hindrance for wider proliferation is that while any renminbi in the PBoC’s own digital wallet is legal tender, places where it can be spent have been limited, thus the expansion to JD.com is important.
“The PBoC has been cooperating with goods and services providers, such as online retail platforms and ride-hailing apps, and more companies are signing up as strategic partners,” said Yu.
Advanced project
Nonetheless, China’s digital yuan is one of the world’s most advanced central bank digital currency initiatives, as it competes to roll out amid competition from volatile cryptocurrencies such as bitcoin and Facebook’s Libra.
Its launch has caused ripples beyond China. In November, a group of Japanese parliamentarians called on their government and central bank to identify potential issues such as privacy and fraud if China’s digital yuan becomes a global standard.
PBoC said in November that it had completed technical preparations for the launch of the digital yuan. It also has plans to build a “digital central bank” that would oversee risk management.
“The digital yuan can … improve customer experience,” said Lu Yunhan, manager of the JDD digital yuan programme. “Additionally, we can provide financial institutions, business partners and enterprises with digital yuan solutions.”
