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China’s digital currency is launched. China is the first country in the world to issue its digital currency. Many other countries are also preparing to launch their digital currencies. It was also reported earlier that the Indian finance ministry is working to launch its digital currency. However, there was no confirmation regarding the same.
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Table of Contents
China’s Digital Currency
Like India’s Reserve Bank of India, China has the People’s Bank of China (PBOC). The PBOC sets all monetary policies in China. The PBOC launched this digital currency. CBDC (Central Bank Digital Currency) is the name of this digital currency. DCEP (Digital Currency Electronic Payment) will serve as the payment platform for this currency. E-Yuan and E-CNY are both alternate names for this currency. In simplest terms, it’s a digital legal tender from the PBOC. In contrast to money deposited in a bank account, this currency will not accrue interest.
China’s Currency Trials
China has been working on this digital currency since 2014, according to reports. In April 2020, China began its testing. Jd.com, China’s biggest online retailer, also took part in the trials. In the coming time, every payment gateway will accept E-YUAN. Indirectly, this will affect global USD payments. Besides USD, E-CNY will create its user base. This will affect the use of USD in the long run. USD serves as the international unit of measure for all monetary comparisons.
The Chinese government views this currency as beneficial for the country. China is already a leader in digital payments compared to other countries. Therefore, this currency will enhance digital payments. According to the Chinese government, duplicating or counterfeiting currency is impossible with a digital currency. The use of digital currency will also reduce the storage and production costs involved with paper currency. The transactional costs of digital transactions are currently unclear. There are transaction costs associated with digital payments, regardless of whether the payer or recipient pays them.
Similarity with Bitcoin
The Bitcoin system is entirely different from the E-Yuan system. Bitcoin is a digital currency based on blockchain technology. You can watch this video to learn more about bitcoin.
The Bitcoin network is untraceable. Transactions involving Bitcoin are too anonymous. The Chinese digital currency, however, is not anonymous. A full picture of the E-Yuan transactions is available to the PBOC. The Chinese government will likely track all transactions conducted through its digital currency. This is one thing China excels at, but it is habitual for them to do. You cannot pay anonymously using E-Yuan, unlike Bitcoin. It works just like a Paytm wallet, but it is regulated by a government organization.
China has recently expanded the use of digital currency to 28 more major cities. In addition, the PBOC has distributed millions of Yuan to commercial banks to convert them into E-Yuan. The trials involved many things, such as converting cash into E-Yuan, making and receiving payments, and much more. Now, this testing is being conducted in 28 more cities. The E-Yuan is becoming increasingly popular in many parts of China.
Additionally, we hope the Indian government is also working to launch its own digital currency. How do you feel about the same? Feel free to comment below.
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