JD.com is a Chinese online mall and the second largest online retailer in all of China.
Soon, it will also be the largest retailer so far to test and accept the Digital Yuan for purchases on their site. The Digital Yuan is a central bank digital currency, or CBDC, issued by the central bank of China, the People’s Bank of China. Starting with a test program launching later in the month, JD.com users will be able to purchase a limited number of items on the site: a first for the major retailer.
What are Central Bank Digital Currencies?
Central Bank Digital Currencies, better known as CBDCs, are fiat currencies created and distributed by government treasuries, but in a digital manner. These CBDCs can utilize blockchain technology. However, they are fully centralized and controlled by the state governing body. For governments, CBDCs have many benefits over traditional currency. For example, there is the ability to easily track citizen spending and money transfer habits. Governments can freeze accounts deemed threatening to the state, and more. Governments peg these currencies to the fiat currency of the nation. This means that they will not fluctuate massively in price like most cryptocurrencies. Because they remain relatively stable, users will be able to transact globally more readily.
What is the Digital Yuan?
China launched the Digital Yuan as a government regulated digital currency to complement the fiat, physical Yuan. According to the People’s Bank of China Governor Yi Gang, the Digital Yuan furthered over four million individual transactions. This totals over $306 million or 2 billion Yuan transacted. China’s goal with the Digital Yuan is to continue establishing its currency as a global leader. This makes it easier to transact with and access online and across the globe. They also plan to exert more control over the Chinese economy as life in general becomes increasingly digital.
Free Digital Yuan
So far, the Chinese have chosen an interesting and novel way to distribute portions of their Digital Yuan. In October, one city government in China gave out 10 million Yuan (approximately $1.5 million) of CBDC. Thousands of local citizens randomly selected after the visit of Chinese President Xi Jinping to their city. This was all done through a regulated Chinese mobile application. The Chinese government has a plan to give away an additional 20 million Yuan ($3 million) to the citizens of the city of Suzhou.