China Launched the First CBDC Wallet Dispenser, With Disappointing Results

Local media outlets in China reported that visitors from Hong Kong had shown little interest in digital yuan (e-CNY) hard wallet dispensers installed by Shenzen city authorities last month. According to the reports, the authorities aimed to distribute 50,000 hard wallets between Feb. 22 and Mar. 31, while only 625 Hong Kong residents have obtained their wallets so far.

Only 625 Residents Obtained CBDC Hard Wallets, Out of 50,000

Chinese authorities in Shenzen city installed the first digital yuan hard wallet dispenser machines last month, which are available exclusively to Hong Kong residents. However, the demand for these machines has been significantly below expectations since then, according to local media.

In collaboration with the state-owned Bank of China and smart payments card issuer Octopus Cards, authorities in Luohu District set up central bank digital currency (CBDC) hard wallet dispensers on Feb. 18. The objective was to issue 50,000 hard wallets from Feb. 22 to Mar. 31. Still, as of Feb. 26, just 625 Hong Kong residents had obtained the wallets.

The dispensers enable Hong Kong visitors to obtain CBDC hard wallets through real-name registration, which they can then top up with Octobus cards. These hard wallets can be used to make payments at more than merchants and shops in the Luhou district, including a 20% consumption subsidy from the government.

China Trying Hard to Boost CBDC Adoption

The disappointing data comes less than a month after Shenzen distributed 100 million yuan (US$14.5 million) in e-CNY to help facilitate the economic recovery after the government eased the stringent zero-Covid policy restrictions. Chinese authorities took similar action last year when they gave out $14.5 million in e-CNY to boost local consumption in Shenzhen, Guangzhou, and Xiong’an New Area.

China is one of the leaders in the global CBDC race, with the digital yuan pilot available in at least 26 cities and provinces across the country. But while authorities have made every effort to promote its CBDC, its adoption still faces many hindrances, including competition with established payment services, limited use cases, etc.

Last month, the Bank of Japan said it would launch a pilot program to run experiments on digital yen use cases, becoming the latest global central bank to start working on a central bank digital currency. Other countries announced similar CBDC-related initiatives in the past year, including India, Brazil, and Russia.

This article originally appeared on The Tokenist

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