(Yicai Global) Aug. 18 -- China has begun closed tests of its national digital currency in such limited deployment areas as retail, the recharging of public transportation cards and catering in some cities, the 21st Century Business Herald reported, citing an executive at a bank in Suzhou.

Half of the transportation subsidy of civil servants in Suzhou started to be issued in the form of digital currency in May, the National Business Daily reported earlier.

The pilot scheme will first run in the cities of Shenzhen, Suzhou, Xiong’an New District, Chengdu and those linked to the Winter Olympics, the Ministry of Commerce said in a document issued on Aug. 14. It will next be extended to the Beijing-Tianjin-Hebei Economic Zone, the Yangtze River Delta Region, the Guangdong-Hong Kong-Macao Greater Bay Area and other areas in the country’s central and western regions where conditions allow, it added.

The Digital Currency Electronic Payment system cannot be widely applied yet as the transfer-without-network function is still being perfected. This is when two cell phones just need to touch each other to transfer digital currency from one person’s digital wallet to another without using the network.

Should financial institutions upgrade their digital technology and with the approval of the central bank, DC/EP application scenarios may be extended to medical, education, e-commerce services, tourism and cultural activities, the executive said.

“We regularly report technical progress and operational issues regarding the piloting of DC/EP to the central bank,” the National Business Daily reported, citing the head of the IT department of a bank in Shenzhen. With mature technical conditions and controlled risk, we will extend the usage scenario to service trade innovation and development, he added.

Editor: Kim Taylor