Shenzhen to issue 20 million digital yuan in Spring Festival red envelopes

SHENZHEN -- China's southern boomtown of Shenzhen will issue digital currency worth 20 million yuan (about $3.1 million) as part of a pilot program to promote the application of the new form of currency.

This is the third time the city will issue the currency in "red envelopes," worth 200 yuan each, via a random draw. In the previous rounds, 10 million yuan and 20 million yuan were issued in October 2020 and early January, respectively.

This round was opened for registration on Wednesday to individual businesses and employees of enterprises who stay in Shenzhen during the Spring Festival in the city's district of Longhua, which funded the round.

Winners of the random draw can download a phone app for receiving and using the currency.

The money can be used for shopping in over 3,500 designated businesses with a digital currency transaction system in place in Longhua District from 9 am on Feb 1 to Feb 9.

In the second round of the test, about 18.23 million digital yuan were transacted, according to local authorities.

Besides Shenzhen, the eastern Chinese city of Suzhou also issued 20 million digital yuan in December as part of a pilot program.

According to a signed article by Fan Yifei, deputy governor of the People's Bank of China, digital yuan will be positioned as legal tender, designed to be treated as M0, meaning cash in circulation such as coins and banknotes.

The digital currency will be issued by the PBOC, the country's central bank, to designated commercial banks which will then distribute it to the public, according to the article published in the Financial News.