• Shenzhen, a southeastern Chinese metropolis, has begun issuing digital yuan hard wallets to Hong Kong tourists.
• The goal was to distribute 50,000 wallets between Feb 22-March 31, but only 625 visitors have taken advantage of the offer so far.
• China is promoting the use of its central bank digital currency (CBDC), known as digital yuan or e-CNY, across 26 provinces and cities in the country.
Shenzhen Issues Digital Yuan Hard Wallets
Promoting Adoption of CBDC in China
Shenzhen’s initiative is part of China’s efforts to promote the use of its central bank digital currency (CBDC), known as digital yuan or e-CNY, across 26 provinces and cities in the country. Earlier this year, Shenzhen distributed 100 million yuan (US$14.5 million) in digital yuan during the Lunar New Year which could be used in restaurants and food businesses to aid economic recovery following Covid-19 restrictions.
Digital Yuan Hard Wallet Dispenser Machines
Local authorities in Luohu district on the border between Hong Kong and mainland China installed China’s first digital yuan hard wallet dispenser machines on 18 February. These machines are only accessible to Hong Kong residents and on 22 February, they launched their first self-service card issuing machine for these wallets. Visitors from Hong Kong can obtain them by entering their real names and topping them up with Octopus cards which can then be used to shop at over 1,400 merchants in Luohu district with a 20% government consumption subsidy.
Low Demand for Digital Yuan Wallets
The goal was to distribute 50,000 digital yuan hard wallets during 22 February- 31 March but as of 26 February, only 625 visitors had taken advantage of the offer reported local media outlets. This shows that demand for these wallets has fallen short of expectations thus far despite China’s promotion efforts for CBDC adoption.
Challenges With Adopting CBDC
Despite China’s efforts to promote CBDC adoption it still faces challenges such as limited use cases and competition from other established payment services such as Alipay and Wechat Pay.