China’s digital yuan: A new currency getting recognition at global economy


China has created its new Central Bank Digital Currency known as e-CNY by using its new payment system, Digital Currency Electronic Payment. The People’s Bank of China’s digital yuan aims to replace some of the cash in circulation. 
It is not the same as bitcoin. Bitcoin is a so-called decentralized cryptocurrency which means it is not controlled by any central authority, unlike digital yuan which is controlled by PBOC. Bitcoin is also built on a technology called blockchain. It’s unclear at this point what kind of technical makeup the digital yuan would have. 
Distribution will take place through a 2-tier system, the PBOC will distribute yuan to commercial banks. These banks will be responsible for getting the currency into the hands of the consumers including services to allow consumers to exchange their coins and cash for digital yuan. 
Real world trials began in May 2020 in four cities- Shenzhen, Suzhou, Chengdu and Xiongan. In December,, a Chinese e-commerce firm said it became the first online platform to accept digital yuan. The city of Shenzhen handed out 20 million digital yuan to citizens via a lottery as a part of its pilot program. 
As per reports, the digital yuan will be directly distributed into the wallets of state-owned bank users, thereby circumventing digital payment apps like Alipay and WeChat Pay, which currently dominate China’s online payment market. 
The digital currency would enable the government to weed out tax evasion, money laundering and other financial illegal activity as well as doling handouts to the beneficiaries. It is also trackable. 
There are major concerns surrounding the digital currency, that the government may use digital currency to crack down on dissidents.  Since it is traceable and can be recorded, the government will have greater control over financial transactions to observe how money is spent in real time, raising privacy concerns. 


Please enter your comment!
Please enter your name here

Enable Google Transliteration.(To type in English, press Ctrl+g)