China warns against fake CBDC app

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The Chinese government has warned the public against fake digital yuan apps that target users with promises of overnight riches.

In a recent social media post, the Ministry of Industry and Information Technology (MIIT)
noted that the fake apps use patriotic themes, flashy advertising, and promises of handsome dividends to lure users. Once they download the app, users are redirected to ‘uncommon social tools’ that can drain the funds from their linked bank accounts.

The ministry said the fake app is branded similar to the official digital yuan app, with slight differences in aspects such as version number and package name.

To protect themselves from scammers, the government advises the public to be wary when scanning QR codes to download new apps, citing it as one common trick scammers rely on. They should also avoid untrustworthy websites and any platform promising unrealistic returns.

The Chinese government has been pushing its central bank digital currency (CBDC) for years. To access, users download the ‘Digital Yuan Test Version’ app from app stores and link their bank accounts, enabling them to make digital payments easily.

To promote the digital yuan, China has given away millions of dollars to users to spark transactions. This strategy has been successful—while the People’s Bank of China (PBoC) hasn’t released any updated figures in recent months, e-CNY transactions by June 2023 hit 1.8 trillion yuan (US$250 billion).

While this number represented significant growth in the first six months of 2023, it’s still a small percentage of the total transactions in the country, which hit $434 trillion in 2022.

The digital yuan has sparked debate globally. Some consider it a significant threat to the U.S. dollar and other Western digital payment systems. However, the U.S. Federal Reserve dismissed these concerns in a recent paper.

According to the Federal Reserve, a foreign CBDC would only pose a serious threat to the greenback if accompanied by substantial geopolitical and economic changes, such as a surge in attractive assets and liquid markets.

To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, read nChain’s CBDC playbook.

Watch: Finding ways to use CBDC outside of digital currencies