Bloomberg reports that Hong Kong will trial China’s upcoming digital currency:
In trials in Shenzhen, Suzhou, Xiong’an and Chengdu, the digital yuan has relied on banks for distribution. The People’s Bank of China gives out the tokens to state-run lenders, which transfer it to customers’ mobile wallets when, say, a municipality pays workers. However, this money isn’t part of bank accounts. A digital yuan transaction from Hong Kong can go global, bypassing both the dollar and the heavy fees of correspondent banking channels, which are under American surveillance and control. Payment can be received in Europe or America as private stablecoins such as the ones Facebook Inc.-sponsored Libra Association is planning…
a recent Brookings Institution paper found that the People’s Bank can issue tokens that carry interest rates. This could be a new way for people.., to take out mortgages — directly from the Chinese monetary authority.
Very recently, the mobile app of one of China’s largest banks temporarily surfaced an interface to set up a digital currency account and send/receive digital ‘money’ to/from this account. The same site CoinDesk had reported the ridesharing app Didi’s public statement that it would trial the use of the digital currency as well. So the issuer (central bank), providers (banks) and use cases (merchants/businesses) are all part of the trial. Despite all the concerns about a parallel money system, this is going to be exciting to watch.
It’s also becoming clear that this isn’t a typical blockchain-based system, as early reports had had it – and with China, it was hardly going to be decentralised. But the reports of interest-bearing tokens does mean that there are elements of programmable money, which borrow from smart contracts.