China gives away £1.1 million worth of digital currency to 50,000 citizens via lottery

Around 50,000 Chinese citizens in Shenzhen were given 10 million yuan ( £1.1 million ) worth of digital currency through a lottery. In an effort to push a cashless society, China's central bank launched a series of trials to test out its Digital Currency Electronic Payment (DCEP), where nearly two million people signed up to gain access to the lottery.

Winning lottery entries received digital red packets each containing 200 yuan (£23). These digital packets can be downloaded and spent in more than 3,000 stores.

The DCEP is not considered crypto-currency but is a digital version of the Chinese yuan. This is backed and issued by the People's Bank of China as it plans to finally launch DCEP later this year, according to the BBC.

Based on statistical surveys, four out of five payments in China are now made via Tencent's WeChat Pay or Alibaba's Alipay. The process of cashless payments has now reached quite a progressive stage in the country as data reveals about 330 trillion yuan (£38 trillion ) worth of non-cash mobile payments were handled by banks in 2019 alone. This showed an increase of more than 25% compared to the previous year.

As the country aspires to become the leader on digital currencies, it has already tested the system in four cities across China and strongly aims to pilot the system in locations chosen for future Winter Olympics.

In a commentary published by the PBOC, it stated how China has the need to become the first nation to issue digital currency as it aims to internationalise the Chinese yuan. Its primary goal focuses on reducing their independence on the global reign of the dollar payment system.

Seven central banks including the Federal Reserve and the Bank of International Settlements now have existing guiding principles on central bank-issued digital currencies. There are at least 17 governments that are currently considering or are already in the process of testing out digital currencies. Private companies across the globe have also been looking into this new concept.

While the concept is enjoying a much talked about relevance in future global currency, central banks worldwide are still trying to grasp their footing on how to properly manage the new era of digital currency payments.