According to reports of Coindesk, the former head of the People’s Bank of China believes that the digital Yuan will not change the world monetary system. He claimed that the country’s national cryptocurrency was not created to change the world’s monetary system.
The former chairman of the People’s Bank of China told the Shanghai Financial Forum that China’s Digital Currency Electronic Payment (DCEP) scheme should not be seen as an advantage for world power.
What is the purpose of producing digital Yuan?
Although there is no exact date for the launch of the project, the People’s Bank of China is likely to be the first central bank in the world to produce digital copies of its currency, the Yuan, to keep pace with a rapidly digital economy. The country has been struggling with e-wallets and online apps this year.
Currently, the Covid-19 pandemic and the need for social distancing have created urgency for the project.
What is the plan to use digital Yuan?
Although not all details of the program have been released, according to Chinese People’s Bank announcements as well as official statements, the use of the digital Yuan is as follows: Consumers and businesses download a digital wallet into their smartphone and withdraw some money from a bank account. They transfer themselves to it. It is similar to going to an ATM.
They can then use this money, called Digital Currency Electronic Payment or DCEP, as cash. Also, trade with anyone else who has a digital wallet.
Digital Yuan test location
In April 2020, the People’s Bank of China tried something. People’s Bank of China allowed commercial lenders to conduct internal and hypothetical digital Yuan trial and error. They did it in several different Chinese cities. Also, it will be possible to use this currency in the 2022 Winter Olympics. In August, China’s Ministry of Commerce announced that the digital Yuan will use in more places, such as Beijing and Hong Kong, but did not release a detailed roadmap.
This trial phase allows some selected users to convert cash or digital to another, view their account credit, and make digital payments or remittances. In Suzhou, some employees of the official organization have received subsidies in the form of cryptocurrency. McDonald’s also accepts digital Yuan-based payments in Jiangyang.
Will Chinese people use digital Yuan?
It is hard to recognize this. The People’s Bank of China digital wallet is just one wallet and probably has features that allow people to pay for things like retail and online services, as well as in areas such as e-commerce and investing. Services like Alipay and WeChat Pay now offer digital services. These services are fully integrate with social media. It seems that digital Yuan and these services can work together in the future.
Ant Company has been part of the research and development of the People’s Bank of China since 2017. The company says in its initial public brochure that it may not be able to update with the new changes. It is hard to discern how DCEP affects the corporate business.
What are the economic implications of digital Yuan?
We will probably not see immediate effects on the economy. Since the cryptocurrency of the People’s Bank of China designed as an alternative to cash, it does not have any impact on monetary resources.
Therefore its impact on monetary law will also be neutral. If cryptocurrency is accepted, and people are encouraged to hold more cash, bank deposits may decrease, but the impact will be manageable. It is according to the cryptocurrency Research Institute at the People’s Bank of China.