SHANGHAI: China is using the digital yuan to stimulate consumption in its pandemic-hit economy, with more e-CNY applications expected in future to boost transparency and effectiveness of government policies.
The southern city of Shenzhen started distributing 30 million yuan ($4.50 million) worth of free digital cash on Monday to revive consumption and aid businesses. It comes days after Xiong’an New Area in northern Hebei province, launched a similar campaign to hand out 50 million yuan worth of e-CNY “red packets” as gifts.
China is at the fore of a global race to develop central bank digital currencies. Issuing e-CNY subsidies can both aid consumption and further promote use of the electronic yuan.
Transactions using e-CNY totaled 87.6 billion yuan at the end of 2021, with 261 million individual e-wallets opened, according to the central bank.
“Previously, when the government issued subsidies, there could be certain obstacles before the money reaches the recipients,” said G. Bin Zhao, a senior economist at PwC China.
“With e-CNY, the cash directly lands into your hands,” boosting transparency, he said.
