China Joins The Bandwagon of Digital Currency — Coming Out In 2021

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• Ever since we have opened eyes in this world, money matters have been integral. On one side, your dad’s checking the files for taxes, while your mom stays busy in keeping a check on the expenses. In other words, money is essential, and there is no denial in that. Fast forward to the 21 stcentury, where China has captured the huge market shares in the manufacturing industries, coining name as the first-world country.

In a concise span of time, China has scaled up its performance and gained a positive image in the world. With Canada’s plastic money, China has innovated the approach by working on the digital currency. By May, China intends on using the digital currency for the transport industry, targeting particular subsidies. According to the People’s Bank of China, the digital currency might be in the pipeline, but the release might not be confirmed for now.

In other words, China is conducting internal tests, or we may say the pilot testing of digital currency. According to some reports, Chengdu, Shenzhen, Xiong’an New District, and Suzhou will be the testing areas for currency testing. However, the twist is added where the digital currency will be introduced Hebei province and Beijing as the 2022 Winter Olympics will be held there. All in all, the currency will be named as the Digital Currency and Electronic Payment.

In other words, by the 2022 Winter Olympics, China’s digital currency will be rounded like normal currency notes. However, it’s highly unlikely that China will release the new currency before the events, which means the digital currency or the digital yuan might be in circulation by 2021’s mid. According to the central bank of China, digital yuan might be launched anytime soon. The statement was later changed.

The digital yuan might be in the pipeline but will be promoted in short terms instead of offering them money in large quantities and normalizing them. According to the developers of digital currency, its currency will be controllable and will integrate anonymity. Also, the development is happening at an advanced level, but in the initial stages, it will be implied at small-scaled businesses with high-frequency sales and retail business.

The digital currency will have a two-tier system, which means the central bank will not be in direct contact with consumers. With this system, the currency will be dispersed through intermediate players by integrating four banks. The currency will be replaced from the traditional currency, as the government doesn’t intend to inflate the current currency. The replacement shall be direct, and the dispersion will be developed through state banks.

The currency will be distributed upon asking the money depositing in the commercial banks. This infrastructure will ensure the seamless circulation of money while providing the fully-integrated reserve in the central bank. The commercial banks will deposit money to the central banks for keeping reserves in the check. The best part is that digital currency doesn’t require a bank account. The money can be transferred from one person to another without the implication of networks or the internet.

The digital currency for the Chinese population has been in the pipeline since 2014. However, back in 2019, Facebook launched its digital currency named Libra, which elevated the currency development activity. With this activity, the research regarding CBDC has enhanced. However, China intends to lower the issuance costs and ease the transactions by implying a convenient infrastructure. China already has Alipay and WeChat Pay for convenient transactions, but digital yuan will be better.

Digitalizing the yuan will help in taking care of anti-money laundering and help monitor currency utilization. In contrast, the US government has been working on the digital dollar as well for ensuring effective and efficient money circulation. For ensuring effective CBDC research, there are six central banks working in coordination to design another digital currency. These central banks include Switzerland, Sweden, Europe, England, Canada, and Japan.

According to the People’s Bank of China, the digital currency will be utilized by 2022, and the currency might be released by mid-2021. In contrast, there is no news from the Central Bank of China about the launch of digital yuan. With the internal testing in four different cities about the digital currency, the Bank of China and Agricultural Bank of China might be working on the mobile app for supporting the digital currency of China.

The People’s Bank of China has confirmed about the advancing research and development of digital yuan. As per their statement, the internal testing will not affect the financial markets, circulation system, and the commercial operations of the bank, along with issuance. According to Suzhou, the municipal government employees shall be receiving transportation subsidies in digital currency. In addition, the subsidies will offer 50% of these transportation subsidies.

China’s digital currency will be designed on the basis of the centralized structure of money in addition to the blockchain. In some unknown state banks, the digital currency is being tested, which is prompting the party members to pay their membership fees in digital form. The testing is under pipeline for trial runs, but the currency is being tested, and the digital yuan isn’t launched officially.

The digital currency can reach a revenue of over 1 trillion yuan in the upcoming years. As compared to the infrastructure of Bitcoin, it’s earned over $200 billion, and China might be competing with it in the coming years. However, China’s digital currency will be equal to one-eighth of current traditional cash. The development was enhanced after Facebook’s news for digital currency, Libra.

In contrast, there is no news from Facebook’s digital currency because people have shown concerns regarding regulations and protection. According to Facebook, they will not launch a separate currency as they intend to integrate the digital unit with the euro or the US dollar. All in all, a pyramid of currencies are under pipeline to ensure optimal circulation!

Originally published at https://audiovisualaoce.com on April 27, 2020.