(Yicai Global) Nov. 23 -- Suzhou will become the second Chinese city after Shenzhen to experiment with the country’s sovereign digital currency on Dec. 12, according to The Paper.

Next month’s test of the crypto-yuan will also be carried out via a digital version of traditional red envelopes, or ‘hongbao,’ used when making a gift of money, the report said, citing a source with knowledge of the matter.

The central bank, the People’s Bank of China, and the southern city of Shenzhen began experimenting with the digital yuan this way on Oct. 9 by issuing 50,000 red envelopes with CNY200 (USD30.48) in each.

Red envelopes contain small amounts of money and are traditionally given at festive times of the year such as the Spring Festival, also called Chinese New Year. In recent years the practice has moved online in step with the explosion in internet and mobile-based payments as internet giants such as Tencent Holdings and Alibaba Group Holding come up with new ideas to lure users.

No timetable has yet been set for the launch of China’s sovereign digital currency, but it will first undergo trials within closed environments in Shenzhen, Suzhou, Xiong’an New Area, Chengdu and at the 2022 Beijing Winter Olympic Games, PBOC Governor Yi Gang said in May.

Many shops in Suzhou, a city west of Shanghai, already use near-field communication quick response codes, but the payment system is still in its early stages, The Paper said. Suzhou’s digital yuan payment system supports offline and touch payment, neither of which are yet available in Shenzhen.

The PBOC’s digital currency/electronic payment project is a digital form of physical notes. The cryptocurrency uses up-to-date dual offline technology and can still function even when users cannot get cellphone reception or access to the internet.

Editor: Tom Litting