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DCEP trials accelerate as new banks are onboarded

2021.02.25 Matthew Lam

Hong Kong onboarded the PBoC in a new CBDC initiative as Geely Auto launches a new blockchain joint venture.

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Central bank digital currencies drew headlines in China and Hong Kong this week after the People's Bank of China onboarded Ant-backed MYbank and Tencent-backed WeBank to the trial of its digital currency, DCEP. The Chinese national bank also partnered with the Chengdu government to boost retail adoption of the state-backed digital currency by distributing red packets worth 40 million CNY — worth roughly $62,000,000 — to citizens for spending across 11,000 shops in Chengdu.

Meanwhile, the digital currency research arm of PBoC, together with the Central Bank of the United Arab Emirates, joined hands with the Hong Kong Monetary Authority and the Bank of Thailand in CBDC initiatives.

Additionally, Chinese automobile giant Geely Holding Group formed a joint venture with Concordium to boost enterprise blockchain adoption.

Here's everything you may have missed regarding these stories, and more, in this week's edition of China Market Watch from OKEx Insights. 

MYbank and WeBank to join DCEP trial

Ant-backed MYbank and Tencent-backed WeBank were reported to have been introduced to PBoC's digital yuan app. The onboarding of the two banks should help PBoC expand its influence and user coverage in DCEP development.

Key takeaways

  • In the DCEP trial, the e-wallets of MYbank and WeBank had the same functionality as the six state-owned banks in China.
  • The banking services of MYbank and WeBank will be incorporated into the digital yuan app.

Hong Kong onboards central banks in CBDC initiative

The Hong Kong Monetary Authority and the Bank of Thailand welcomed two new partners to the second phase of Project Inthanon-LionRock — namely, the Central Bank of the United Arab Emirates and the Digital Currency Institute of the People's Bank of China.

According to the joint statement, Project Inthanon-LionRock will be renamed as "Multiple Central Bank Digital Currency (m-CBDC) Bridge." The CBDC initiative is supported by the Bank for International Settlements Innovation Hub Centre in Hong Kong.

Key takeaways

  • The key objective for the participating central banks is to evaluate the feasibility of the m-CBDC Bridge Project for cross-border fund transfers, international trade settlements and capital market transactions.
  • Similar to the Project Inthanon-LionRock, the m-CBDC Bridge project aims to facilitate real-time cross-border foreign exchange transactions in multiple jurisdictions.
  • The m-CBDC Bridge project will also explore cross-border business use cases with both domestic and foreign currencies.

Chengdu announces DCEP red packet lottery

The Chengdu government announced a DCEP red packet lottery worth 40 million CNY. There are two types of DCEP red packets — each worth 178 CNY or 238 CNY, respectively.

The recipients can spend their DCEP across 11,000 shops in Chengdu, denoted in five categories:

  1. Food and beverage
  2. Supermarkets
  3. JD.com's shopping network
  4. Designated tourist spots
  5. The innovation center for young entrepreneurs

Key takeaways

  • Citizens in Chengdu may register for the DCEP red packet lottery through a mobile app by Feb. 25. The result of the lottery will be announced on March 3.
  • For the aforementioned shops that accept DCEP, those in JD.com's network only accept online payments. The shops in the remaining four categories accept offline payments.
  • This is the first time the public is able to spend DCEP in innovation centers or startup zones.

Geely forms joint blockchain venture with Concordium Foundation

Geely Holding Group — a Fortune Global 500 company and the largest shareholder of Volvo — has signed a joint blockchain venture agreement with Swiss blockchain enterprise Concordium Foundation.

The joint venture provides Chinese businesses with access to new blockchain-based business models and decentralized applications.

Key takeaways

  • Geely will own 80% of the joint venture while Concordium will own 20%. The operation will be co-managed by both companies.
  • The joint venture is expected to be operational later this year after regulatory approval.
  • The joint venture will help enterprise clients implement new technologies in regulatory technology, digital identity and privacy. 

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