As simple as a phone call. When it comes to central bank digital currency (CBDC), China is moving fast, very fast, and could soon be the first country to democratize such technology. Far ahead of the United States or Europe, which are still asking many questions, the Middle Kingdom is moving at top speed towards its digital yuan. But to go even further and put this new currency in the pockets of its billion-plus inhabitants, the Bank of China is planning to rely on smartphones, which are already ubiquitous in Chinese daily life. We tell you all about it.
NFC technology to simplify MNBC payments in China
One of China’s four largest banks, the Bank of China (BoC), has just announced a partnership with national telecom operators to test SIM-based payments. China Telecom and China Unicom will begin large-scale testing of a new payment system this week. in digital yuan which will use NFC technology – Near Field Communication. Called Communication en Champ Proche (CCP) in French, this system is already widely used with contactless payments from your bank card. Basically, it enables any device equipped with a smart card reader or other compatible device to communicate.
Visit project of the BoC would be to create « super SIM cards which would enable users to pay in digital yuan simply by approaching a payment terminal with their smartphone. Much as is currently done with the Google Pay or Apple Pay applications, which use NFC to function, it will now be possible to pay a bill or a bill with a simple phone, even if it’s switched off, the press release states.
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Some lucky people can already use digital yuan on their phones
For the moment, only certain latest-generation Android phones are compatible with this use, but eventually the vast majority of devices will be able to serve as simplified mobile wallets. Indeed « Super SIM cards will be even faster and more efficient with the forthcoming 5G, but for the time being, the whole country is not covered by this network. Meanwhile, the Central Bank of China is also continuing with its MNBC experiments, as it is already testing the digital yuan in around 17 cities and regions across the country.
Beijing, Shanghai, Shenzhen and Suzhou are among the locations being used as full-scale tests in the country before a probable extension to the rest of the population. China is definitely well ahead of the rest of the world and, for the time being, has a pretty clear idea of what it wants and what it doesn’t want.
Yes to a centrally controlled and managed MNBC, but no to decentralized digital currencies. Yes to digital yuan and no to Bitcoin, basically, it sounds like that. As for everything that revolves around blockchain, such as the tokenization of financial assets, private stablecoins and other ETFs, it’s Hong Kong that serves as the advanced operational base. Decidedly, the Chinese authorities do with cryptos as they do with the free market: they participate, but with their own rules. To make sure they win on all fronts? Answer in a few years’ time.
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