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Shanghai Plans To Auction $3 Million In Digital Yuan

Shanghai Plans To Auction $3 Million In Digital Yuan

June 04, 2021 at 07:19PM
by PYMNTS

It’s a common practice in China to give gifts known as “red packets,” or cash tucked into small red envelopes.

Now, that tradition is going digital. As Reuters reported Friday (June 4), Shanghai will hold a lottery this weekend to give residents the chance to win electronic red packets worth a total of around 20 million yuan (or $3 million) as China ramps up its testing of its digital currency.

The announcement that Shanghai will give out 350,000 red packets, each containing 55 digital yuan, comes just days after the city of Beijing announced plans for its own $6.2 million digital currency lottery.

China has spent the last seven years working on a digital currency for use within the country. Although it has held lotteries around the country, it has yet to unveil plans to release a digital currency nationwide. Unlike bitcoin, which has no central agency backing, the digital yuan would be backed by the People’s Bank of China. It is an example of what is called a central bank digital currency, or CBDC.

As Reuters notes, China is one of the leaders in an international race to launch central bank digital currencies. The nation has held CBDC trials in several cities. Analysts say the digital yuan would strengthen data control and possibly boost the yuan’s standing worldwide.

This weekend’s drawing starts Saturday and will end Sunday, open to anyone in Shanghai. Winners can use their winnings in Shanghai and other cities running digital yuan trials from June 11 to June 20. Several major Shanghai shopping districts already allow customers to use digital yuan at shops, malls, restaurants, hotels and supermarkets, Reuters said.

As PYMNTS reported earlier this week, the lotteries are another sign of China’s increased focus on using retail transactions to increase familiarity with and enthusiasm for CBDCs.