China has expanded its trial of its Digital RMB to include a first privately-owned bank.
According to China News Service, Zhejiang E-Commerce Bank Co Ltd, located in Hangzhou and 30% owned by Alibaba, has become the seventh bank in China but first private bank to offer testing of the Digital RMB.
Customers will be able to download a digital wallet on the same designated app already being used by the country’s six largest commercial banks – the Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, Bank of Communications, China Construction Bank and Postal Savings Bank of China – within which to store their digital currency.
The integration of Zhejiang E-Commerce Bank represents another significant step in China’s preparations to roll out its Digital RMB as an official currency by 2024.
Those preparations are also planned to include the 2022 Beijing Winter Olympics, with Li Bo, vice-governor of the People’s Bank of China, recently revealing the Digital RMB “will not only be offered to domestic users, but also to international users,” during the event.
Macau Chief Executive Ho Iat Seng recently revealed the SAR will also amend its financial laws to allow for the introduction of China’s Digital RMB in the future.
“Although Macau has not yet reached this process at this stage, we should follow the pace of the mainland government,” he said in April. “We will keep communication with the People’s Bank of China and start a feasibility study around launching the Digital RMB in Macau. Therefore, we need to add provisions in relevant law to allow for the introduction of digital currencies.”
China took its first steps towards a Digital RMB in late 2019 via a pilot program in Shenzhen, Guangdong, Suzhou, Chengdu, Sichuan and Xiong’on New Area.
The pilot programs, since expanded, have included general living payments, catering, transportation, expenditure and government services.
As previously reported by IAG, China’s Digital RMB has the potential to be a game-changer for Macau by overhauling entire payment systems, reducing reliance on payment apps such as WeChatPay and Alipay and potentially replacing the pataca as Macau’s main currency.
“If the RMB were to become legal tender in Macau, then the path is opened to usage of Digital RMB as well,” said Brokerage Bernstein in a recent note.
“In the context of casinos, this would mean for example being able to buy chips for play directly from the casino cage (or even a table) instantly using (digital) RMB without the need to convert into HKD.
“The elimination of the need for currency conversion from the key Macau customer group (mainland Chinese) would be advantageous as it would simplify the process and not subject customers to f/x transaction costs.
“Digital RMB would allow greater government scrutiny and control over money flows. But it would also allow easier money transfer [and] eliminate the need to use intermediaries (like junkets, underground banks or pawnshops).
“Mass and premium mass play could surely benefit due to ease of money flow.”
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