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China Uses CBDC To Show Its Big Panda Paw With A Shenzhen e-CNY Lottery.

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Shenzhen e-CNY
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With another wave of the COVID-19 pandemic leading to new lockdown measures, the Chinese economy has witnessed a hit in recent months. Beijing has delivered the policy support. 

Now, the Chinese government is taking the help of e-CNY to revive the economy. 

The city of Shenzhen started an e-CNY lottery for consumers on Monday. As per the latest reports:

Southern started distributing 30 million Yuan ($4.50 million) worth of free digital cash on Monday to revive consumption and help businesses. 

Consumers will be able to use the e-CNY for buying goods online and at stores.

The total amount of e-CNY transactions will be 87.6 billion yuan ($13.8bn) by December 2021, with 261 million individual wallets opened ahead of the Winter Olympics, according to the South China Morning Post (SCMP).

The SCMP reports further reveal that over 8 million merchants accepted the digital yuan by December 2021.

US Lawmakers Still Skeptical About US Dollar CBDC

Last Thursday, Lael Brainard, Fed Vice Chair, attended a virtual hearing on US central bank cryptocurrencies.  

The Fed CBDC report was the major point of discussion:

The rapid ongoing evolution of the digital financial system at the national and international levels should lead us to frame the question not of whether there is a need for a central bank-issued digital dollar today. Still, instead, could there be conditions in the future that can give birth to such requirements, Brainard said, giving testimony before the Committee on Financial Services.

Lawmakers seemed divided as Brainard stated reasons to pursue a Dollar CBDC.

Patrick McHenry, a member of the Republican Party, shared his views on several considerations. 

McHenry says that no one has made a strong case explaining why we should expand the Fed’s mandate into retail banking or how a Fed-issued CBDC won’t politicize the Fed. 

McHenry also warned of significant harm to our financial system if we move forward without sorting through potential consequences.”

Brainard pointed out the following risks:

  • Decreasing use of cash.
  • No access to a safe central bank-issued digital currency for consumers. 
  • Fragmentation of the payment system can occur if stablecoin becomes the dominant form of the US digital dollar. 
  • Instability is associated with cryptocurrencies.

The hearing also highlighted that the Fed and US lawmakers are way off from a central bank digital currency. The US is in the research phase, according to the CBDC Tracker.

Nancy J. Allen

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