At the Olympic Games, Beijing sees a chance to sell the world in digital yuan Crypto news

Beijing, China – In December 2020, Shen Xue, a retired Chinese skater and 2010 Olympic champion, appeared on Chinese television as the first person to use the country’s official digital currency to buy a Beijing subway ticket.

By sliding the turnstile with ski gloves equipped with the latest yuan digital wallet, Shen marked the launch of China’s campaign to promote its central bank’s digital currencies abroad during the 2022 Beijing Winter Olympics.

The Winter Olympics were originally planned as a stunning e-CNY debut, presenting the digital form of China’s sovereign currency to millions of visitors worldwide. Foreign visitors will be able to use e-CNY to buy items during the games, which officially start on Friday, without an internal bank account.

These plans went awry with the outbreak of the COVID-19 pandemic, during which the Chinese capital was largely closed to the world. Under the “zero COVID” policy, which seeks to halt all transmission of the virus, Beijing has adopted a “closed loop system” for the games, in which 11,000 players are isolated from the general public.

“The Olympics would be the first real chance for both tourists and Chinese citizens to learn about the digital yuan,” Craig Singleton, a senior Chinese fellow at the Washington-based Foundation for the Defense of Democracies, a think tank, told Al Jazeera.

However, that door slammed shut when Beijing decided to suspend matches between local spectators and foreign visitors, Singleton said.

A leader in the development of digital currencies of central banks (CBDC), the People’s Bank of China first discussed the digital yuan in 2014, as its counterparts are still assessing the benefits of virtual currencies. Unlike cryptocurrencies, which China banned last year due to concerns about financial stability and crime, CBDCs are issued and controlled by a central authority.

In January, the central bank announced that more than 261 million individual users had registered a digital portfolio in yuan, an application using e-CNY. The number of users has doubled since October.

A woman runs past an installation near the Beijing Olympic Park at the 2022 Winter Olympics, Tuesday, January 25, 2022, in Beijing.  (AP Photo / Jae C. Hong)Visitors to the 2022 Winter Olympics in Beijing can use the Chinese e-CYN for shopping [Jae C Hong/AP Photo]

For more than a year, Beijing has been piloting its digital currency for gaming use, recording transactions worth 9.6 billion yuan ($ 1.5 billion) by the end of 2021, according to the Beijing Financial Supervisory Authority.

The regulator said the city had tested the digital yuan in more than 400,000 “scenes” involving actual purchases of goods and services before the Olympics, with more than 12 million individual users and 1.3 million users of companies registered in the app.

“Today’s China has become extremely digital and cashless for the Chinese, but there are no systems available for connecting foreign credit cards,” said Richard Turin, a Shanghai-based consultant and author of Cashless: China’s Digital Currency Revolution, told Al Jazeera.

Currently, foreign visitors are often unable to make payments in China, especially to retailers and taxi drivers, Turin said.

In 2020, a record 432 trillion yuan ($ 67.9 trillion) in transactions were made through mobile payments, mostly to Alipay’s Alipay and Tencent’s WeChat Pay.

Bloomberg Intelligence estimated last year that the digital yuan could take a 9% share of the domestic market by 2025. Alipay and WePay are now thought to have a combined market share of more than 90%.

For Chinese citizens, the transition from digital payments from technology giants to the CBDC is an easy transition, according to Suji Yang, founder of the Mask Network, a Singapore-based startup for cryptographic and encryption.

“They are already paying consumers for technology giants like WeChat and Alipay, and now that’s just a change [of payment apps]which doesn’t matter to most Chinese consumers, “Yang told Al Jazeera.

Distrust abroad

The Olympic demonstration of the digital yuan in Beijing may find a less receptive audience abroad, amid growing distrust of Chinese technology, especially when it comes to data confidentiality and regulatory scrutiny.

“For foreign consumers, anonymity and confidentiality are key issues in the implementation of the digital yuan,” Sebastian Mouse, global head of payments at Berlin-based consulting firm Roland Berger, told Al Jazeera.

“It simply came to our notice then [for foreign users]. So I doubt that many tourists or athletes will really download the application and use it. “

There are currently four levels of user category, which allows users to decide how much information to share with the digital wallet app to reach different usage limits, according to state media Xinhua.

“But even in the simplest model with only a cell phone number, no one really believes that their transactions will be anonymous and private,” Mouse said.

In July, three U.S. senators called on the U.S. Olympic Committee to ban U.S. athletes from “receiving or using the digital yuan at the Beijing Olympics,” citing concerns about privacy. Several other countries, including the United Kingdom and Canada, have offered similar advice to their athletes.

Today, in the Olympic Village, the digital yuan is one of only three payment options for foreign athletes and visitors, along with cash and Visa cards, according to three acquaintances.

Empty seats at the Beijing Winter Olympics Beijing’s plans to introduce the digital yuan to the world have been thwarted by the pandemic [File: Tingshu Wang/Reuters]

“Many of us use the digital wallet here because I didn’t bring cash with me – it’s quite convenient,” a Chinese volunteer staying at the Olympic Village told Al Jazeera. “I do not understand this.”

“Foreign athletes mostly use their Visa cards,” said the volunteer, who asked not to be named.

Foreign visitors who choose to sign up for the digital wallet are likely to reconsider the currency only when they come to China in the future, said Mouse of Roland Berger.

“But it’s really a small part,” he said.

In addition to retail deals, Beijing may be looking to make big deals with companies and other countries in e-CNY, industry observers predict.

“This must be done through slow political agreements with central banks in different countries, mainly the One Belt, One Road and RCEP countries,” said Turin, a Shanghai-based consultant, citing the world’s largest consultant. world free trade pact and belt. and the Road Initiative, Beijing’s intercontinental infrastructure. “This will be a very slow and limited spread of its international use.”

The digital yuan is currently used primarily for retail transactions in China, National Bank of China Governor I Gang said in November.

Despite the large number of registered users in China, analysts say the digital yuan has a long way to go when it comes to its use abroad.

“In their home countries, they cannot spend the Chinese yuan with a digital wallet, for example in Europe,” Mouse said. “And I doubt there will be [acceptance of the digital yuan] in the next five to 10 years. “

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