A new industrial park has opened in the Chinese district of Luohu, Shenzhen that will focus on developing Central Bank Digital Currency (CBDC) technologies.
The new location offers up to 20 and 50 million yuan to both banks and start ups respectively to set up operations there, as well as up to three years of free rent and loans for residents moving into the park.
This is all so that the government can boost the country’s digital ecosystem and payment solutions infrastructure.
Currently there are nine residents in total at the park, including payments processor Lakala Payment and card companies Hengbao and Wuhan Tianyu Information.
Reuters cited China’s Deputy Administrator for the State Administration of Foreign Exchange (SAFE), Lu Lei, as he believes that CBDCs have “programmable attributes” to be used as M2 rather than M0 currency.
“M0 is physical paper and coin currency in circulation, plus bank reserves held by the central bank also known as the monetary base. M1: All of M0, plus traveller’s checks and demand deposits. M2: All of M1, money market shares, and savings deposits,” as per Investopedia.
Lei was further quoted by Reuters as saying that the People’s Bank of China is on the verge of further research into various CBDC use cases and how the technology can be integrated into the macro-economy using features like adjustable rates, expiration dates, amongst other benefits – making cross-border transactions more accessible in the process.