China’s efforts to develop a centrally issued digital currency took a leap forward on Sunday as the state-owned Agricultural Bank of China launched the first digital yuan ATMs.
Customers at select branches within the Shenzen region have reportedly begun spending and converting the digital yuan they received as part of China’s “red envelope” lottery, which saw $3 million worth of the new currency gifted to 100,000 local citizens.
The ATMs reportedly allow the deposit and withdrawal of digital yuan via a smartphone app and allow users to convert cash and savings to and from the central bank digital currency.
The Agricultural Bank of China is one of the country’s “Big Four” state-owned banks, which collectively represent the four largest banking institutions in the world. The manager of the bank’s Digital Yuan Innovation Lab, Zou Hua, said the ATM rollout was part of efforts to guide citizens toward the eventual digitization of cash.
“Agricultural Bank has taken the lead in launching the ATM cash deposit and withdrawal function in the industry to guide Shenzhen residents to adapt to the digitization of cash and explore service transformation,” he said.
Reports in the Shenzen Daily suggest that the accelerated progress of the digital yuan pilot could indicate a large-scale rollout within the year. However, in December 2020, the former governor of the People’s Bank of China played down the notion that the digital yuan would replace international fiat currencies, adding that China had enacted a more cautious approach after witnessing the global pushback against Facebook’s Libra, now Diem, project.
China is regarded as a pioneer in central bank digital currencies. Its digital yuan is expected to act as the cashless payment method within China’s “smart cities” in the coming years.