SHANGHAI, May 30 Reuters China is using the digital yuan to stimulate consumption in its pandemichit economy, with more eCNY applications expected in future to boost transparency and effectiveness of government policies.

The southern city of Shenzhen started distributing 30 million yuan 4.50 million worth of free digital cash on Monday to revive consumption and aid businesses. It comes days after Xiong39;an New Area in northern Hebei province, launched a similar campaign to hand out 50 million yuan worth of eCNY red packets as gifts.

China is at the fore of a global race to develop central bank digital currencies. Issuing eCNY subsidies can both aid consumption and further promote use of the electronic yuan.

Transactions using eCNY totalled 87.6 billion yuan at the end of 2021, with 261 million individual ewallets opened, according to the central bank.

Previously, when the government issued subsidies, there could be certain obstacles before the money reaches the recipients, said G. Bin Zhao, senior economist at PwC China.

With eCNY, the cash directly lands into your hands, boosting transparency, he said.

Zhao added that in the future, the government can use eCNY for pension payments, fiscal subsidies and even infrastructure spending.

Xia Chun, chief economist at wealth manager Yintech Investment Holdings, said that compared with traditional means, eCNY is more efficient and swift when it comes to subsidies, although he feels the size of the current consumption…