Tag: Currency

China hands out $1.5m of digital currency in cashless society trial

  • Authorities in Shenzhen, southern China, have handed out $1.5 million of a new digital currency as part of a trial of a cashless society.
  • Last Friday authorities gave 50,000 lottery winners the equivalent of $30 each to spend digitally by October 16, the state-run China Daily reported Monday.
  • The digital currency is not like a cryptocurrency, and is issued and controlled by China’s central bank, the People’s Bank of China.
  • The PBoC said it plans to formally launch the digital payment system in late 2020, according to the BBC.
  • Visit Business Insider’s homepage for more stories.

A Chinese city has handed out 10 million yuan, or $1.5 million, in digital currency to trial what citizens would do in a cashless society.

On Friday, 50,000 people living in the Luhou district of Shenzhen were given digital “red envelopes,” each containing around 200 yuan ($30) worth of the digital currency, the state-run China Daily reported Monday.

The digital currency not a cryptocurrency, like bitcoin or ethereum, but a digitized version of the country’s renminbi currency that is run by China’s central bank, the People’s Bank of China.

The country’s four largest state-owned banks are taking part in the Shenzhen trial, China Daily reported.

The trial requires people to download the government’s digital currency app and spend their money between October 12 and October 16 in 3,000 participating stores in the district, CNBC and China Daily reported. One of those participating stores is Walmart, CNBC reported, citing the Shenzhen government.

FILE PHOTO:  A woman wearing a mask walks past the headquarters of the People's Bank of China, the central bank, in Beijing, China, as the country is hit by an outbreak of the new coronavirus, February 3, 2020. REUTERS/Jason Lee/File Photo/File Photo

A pedestrian walks past the headquarters of the People’s Bank of China in Beijing on February 3, 2020. The PBoC is in charge of issuing the digital currency.

Reuters


So far, around 113,300 such digital currency apps — or “digital currency wallets” — have been set up in various pilot programs across China, with more than 1.1 billion yuan ($163 million) of transactions carried out so far, Fan Yifei, the PBoC’s deputy governor, told China Daily.

The Shenzhen pilot scheme appears to be the country’s largest so far, according to CNBC. Shenzhen is China’s tech hub, and home to companies like Tencent and Huawei.

According to The Guardian, some 2 million people in Luhou had applied to be part of the trial before 50,000 were selected.

The PBoC said it will formally launch the digital currency late this year, the BBC reported, but is yet to confirm a date.

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Cuban government urges calm as government prepares to unify dual currency system

HAVANA – Cuba’s economy minister on Monday urged calm as the government prepares to unify its dual currency system and multiple exchange rates in hopes of improving economic performance.

The Caribbean island nation is undergoing a crisis caused by an onslaught of new U.S. sanctions on top of a decades-old embargo, the pandemic and its inefficient Soviet-style command economy.

Alejandro Gil, speaking during a prime-time broadcast on state-run television, said the country could not overcome the crisis without unification which he said included wage, pension and other measures to protect the population.

CUBA SELLING USED CARS FOR 1ST TIME

“It is a profound transformation that the economy needs that will impact companies and practically everyone,” Gil said.

“It is for the good of the economy and good of our people because it creates favorable economic conditions that will reverberate through more production, services and jobs,” he added.

Cuba’s economy minister on Monday urged calm as the government prepares to unify its dual currency system and multiple exchange rates in hopes of improving economic performance. (Photo by Peter Dazeley/Getty Images)

The monetary reform, expected before the end of the year, will eliminate the convertible peso while leaving a devalued peso, officially exchanged since the 1959 Revolution at one peso to the dollar.

The soon to be removed convertible peso is also officially set at one to 10 pesos to the dollar for state companies and 24 pesos sell and 25 pesos buy with the population.

The government has stated numerous times that residents will be given ample time to exchange convertible pesos at the current rate once it is taken out of circulation and banks will automatically do the same with convertible peso accounts.

President Miguel Diaz-Canel said last week the country would end up with a single currency and exchange rate with the dollar but did not say what that rate might be or the date devaluation would happen.

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Foreign and domestic economists forecast the move will cause triple digit inflation and bankruptcies while at the same time stimulating domestic economic efficiency and exports over imports.

The state controls the lion’s share of the economy and sets most wages and prices. Neither domestic currency is tradable outside Cuba.

“There will be no shock therapy here, the vulnerable will be protected. At the same time, it will favor motivation to work and the need to work to live,” Gil said.

Diaz-Canel announced in July that market-oriented reforms approved by the Communist party a decade ago and never implemented, including monetary measures, would be quickly put in place in response to the crisis. He said last week that monetary reform had now been approved by the all-powerful politburo.

Cuba, dependent on food, fuel and other imports has been caught short of cash as sanctions hit its foreign exchange revenues and the pandemic demolishes tourism and undermines remittances, creating food, medicine

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New Indonesian Law Is Boosting Asia’s Worst-Performing Currency

(Bloomberg) — The Indonesian rupiah has languished at the bottom of Asian currency rankings for most of the year but a recent overhaul of the nation’s investment law may help revive its fortunes.

The rupiah rose about 1% against the dollar last week after Indonesia approved its first omnibus law aimed at cutting red tape to boost investments and create jobs. That’s after a loss of 4.1% in the quarter ended September amid concern over Bank Indonesia’s independence, debt monetization and an economy poised for its first annual contraction since 1998.

“The passing of the omnibus labor law is good news for the rupiah as it’s a long-term structural reform that will improve the growth prospects of the economy,” said David Forrester, FX strategist at Credit Agricole CIB in Hong Kong. “We forecast USD/IDR to reach 14,500 by year end.”



graphical user interface, chart: Rupiah's 200-DMA continues to limit currency's gains


© Bloomberg
Rupiah’s 200-DMA continues to limit currency’s gains

The rupiah, which traded at 14,700 against the dollar on Friday, has fallen 5.7% so far this year as Asia’s worst performer.

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Even though the rupiah failed to breach resistance at its 200-day moving average, support near 15,000 has held in the second half of the year aided by a burgeoning trade surplus, and Bank Indonesia’s support. Not only has the central bank intervened in the currency market, it has also left rates unchanged at its last two meetings.

Rupiah bulls will therefore be focusing on the central bank’s policy decision Tuesday, hoping that it continues to prioritize the currency’s stability over growth by keeping rates at present levels. All of the nine economists in Bloomberg’s survey forecast that BI will continue to be on hold.

Global risk sentiment still remains a risk for rupiah’s appreciation given 27% of the nation’s bonds are held by foreign investors. The virus spread is another concern as the nation reported the most number of cases last week since the start of the outbreak. And while investors have cheered the new investment law, workers have mounted protests on concerns it erodes their labor rights.

“The outlook for rupiah in the coming weeks will hinge on global risk sentiment given IDR is a high yielder in Asia,” said Irene Cheung, FX strategist at ANZ Banking Group Ltd. in Singapore. “On this front, the U.S. election will be a key watch given the high uncertainty and news flows.”

Below are the key Asian economic data and events due this week:

Monday, Oct. 12: Japan PPI and core machine orders, Malaysia industrial production, India CPI and industrial productionTuesday, Oct. 13: RBNZ’s Bascand speaks and New Zealand retail card spending, China trade balance, Bank of Indonesia rate decisionWednesday, Oct. 14: Australia consumer confidence, Japan industrial production, Bank of Korea rate decision, Singapore 3Q GDPThursday, Oct. 15: RBA’s Lowe speaks and Australian employment, China CPI and PPI, Indonesia trade balance, Philippine overseas remittances, India trade balanceFriday, Oct. 16: New Zealand businessNZ manufacturing PMI, Singapore non-oil domestic exports

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