The e-CNY is now available to students at Hainan Luxun High School through a palm-sized device that gives parents control over spending and phone calls. The device expands the digital yuan’s use to children on the southern island ahead of further expansion to new cities expected this year. — SCMP
China’s rapidly expanding sovereign digital currency has arrived in school in the form of a palm-sized device that allows parents to track the location and purchase records of their kids.
The new e-CNY “card”, which is effectively a small mobile phone, is being made available to students at Hainan Luxun High School in the city of Sanya, in China’s southernmost province. The device lets students make payments at designated stores and make calls with select numbers. Location tracking is enabled through GPS, according to state broadcaster China Central Television (CCTV).
Parents can place limits on the device using the e-CNY app, China’s official digital currency wallet that became widely available to the public in January. The app lets parents top-up their children’s e-wallets and access their consumption records using a special SIM card.
Parents can also choose which phone numbers can reach the device, which was co-developed by the Industrial and Commercial Bank of China and telecoms companies. In addition to the numbers of three trusted family members, parents can add up to 20 other numbers for incoming calls to the device to help children “avoid the harassment of unknown calls”.
With smartphones banned by the education ministry at primary and middle schools, the project at Hainan Luxun High School, which covers grades one to 12, aims to satisfy the needs for parents and students to communicate and “address the issues of students’ daily consumption and commuting safety”, CCTV reported.
China became the first major economy to begin exploring its own central bank digital currency (CBDC) in 2014, an effort that ramped up in 2019. The e-CNY is now being trialled in many cities across China, but there is no official timetable for a national launch.
Current trials remain active in Beijing, Shanghai, Chengdu and Xian. Other cities such as Shenzhen and Suzhou have been involved with promoting the e-CNY since late 2019.
Trials are set to expand this year to more cities, including Chongqing, Tianjin, Hangzhou and Guangzhou.
Hainan has been the only location to get a provincewide e-CNY trial. As of mid-February, 116,800 stores across the island accepted the digital currency, according to the state-run People’s Daily.
Nationwide, the e-CNY had 261 million users by the end of last year, double what it had in October.
China’s rapid push to develop a sovereign digital currency, known officially as the Digital Currency Electronic Payment (DCEP), has made the country a global leader in the area.
Many other central banks have explored the development of a CBDC. Nine countries, seven of which belong to the Eastern Caribbean Currency Union, have launched a digital currency, according to the Atlantic Council. Another 15 countries are piloting a digital currency, but China is by far the largest economy to do so.
The US is among the 40 countries still researching the idea. The Federal Reserve released a research paper on CBDCs in January. The following month, the Federal Reserve Bank of Boston released research on two different architectures that could theoretically support a digital dollar.
The Bank of Japan has also advanced in this area, saying it moved to the second phase of its CBDC experiment in April, which focuses on financial stability. The bank did not clarify whether it would make a digital yen available to the public.
China said last month that it would expand cross-border use of the digital yuan “when the time is ripe”, with technical testing already under way with Hong Kong. – South China Morning Post
