China Merchants Bank Joins Digital Currency Trials

What’s new: China Merchants Bank Co. Ltd. (600036.SH) has become the latest commercial bank to join the central bank’s pilot program to research and develop the digital currency, a deputy governor of the People’s Bank of China (PBOC) told Caixin.

Following a Friday briefing held to release a white paper (link in Chinese) on China’s digital currency, PBOC Deputy Governor Fan Yifei told Caixin that China Merchants Bank had recently won approval.

Multiple lenders have joined the program, including the country’s six largest state-owned commercial banks by assets: Industrial and Commercial Bank of China Ltd. (ICBC) (601398.SH), China Construction Bank Corp. (601939.SH), Agricultural Bank of China Ltd. (601288.SH), Bank of China Ltd. (BoC) (601988.SH), Postal Savings Bank of China Co. Ltd. (601658.SH), and Bank of Communications Co. Ltd. (601328.SH).

In addition, the country’s “Big Three” telecom operators are partnering with specific banks on the digital currency trials. China Telecom and China Unicorn are partnering with BoC while China Mobile Ltd. is working with ICBC, Fan said.

Ant Group Co. Ltd.-backed MYbank and Tencent Holdings Ltd.-backed WeBank have also participated in the digital yuan pilot program, Fan said.

As of June 30, more than 70.7 million transactions had been made with China’s new digital currency, reaching 34.5 billion yuan ($5.3 billion) in transaction value, according to the white paper.

The background: Previously, China Merchants Bank was not allowed to issue digital-currency e-wallets and could only provide digital-currency circulation services.

China’s digital-currency program features a two-tier operational structure. The framework, which focuses on improving the domestic retail payments system, calls first for the PBOC to issue digital yuan to commercial banks and other institutions, which then, in turn, distribute it to the public.

Zhou Xiaochuan, a former governor of the PBOC, said previously that such a system can give more incentives and responsibilities to commercial lenders and other institutions.

Quick Takes are condensed versions of China-related stories for fast news you can use. To read the full Caixin article in Chinese, click here.

Related: In Depth: China’s Digital Currency Ambitions Lead the World

Contact reporter Kelsey Cheng (kelseycheng@caixin.com) and editor Joshua Dummer (joshuadummer@caixin.com)

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