By Shelly Melancon (Switzerland)
China is continuing a test run of its digital currency by allowing Beijing residents to own $6.2 million worth of digital yuan. The Beijing local finance supervision and administration bureau has revealed that Beijing residents can use a few banking apps to apply for the available 40 million renminbi. Each successful applicant will be entitled to 200 renminbi as only 200,000 packets of the renminbi (now termed red packets) is available. However, these renminbi owners need not worry about being unable to spend their new digital currency as some designated businesses are willing to accept the renminbi as a medium of payment. This lottery represents another test run for China’s central bank digital currency (CBDC), but all the test runs for the digital yuan have been restricted to a few china suburbs.
China CBDC tests
Even though china’s CBDC tests started last year, the development of a digital yuan has been in the works since 2014. Shenzhen was one of the suburbs to hold their lottery last year, while earlier this year, Chengdu gave out over 40 million worth of digital yuan.
But, Li Bo, deputy governor for the People’s Bank of China (PBoC), revealed that the central bank would soon extend these trial runs to other Chinese suburbs and provinces. He even said that PBoC is considering whether to allow foreigners at the 2022 Beijing Olympics to use it. Furthermore, Mr. Bo reiterated that the launch of the digital yuan isn’t an attempt to challenge or usurp the supremacy of the U.S. Dollar as the CBDC’s use would be restricted to China alone.
Also read:Li said, “while we intend to make the renminbi global, we want it to happen naturally, and our objective is not to usurp any international currency, including the U.S. Dollar. Our main objective is to give the market options for fast and effective international trade or investment.” despite li’s public disclosure, European and American economic analysts still have their reservations. There were rumors early in the year that this current American government will monitor developments regarding the digital yuan closely. The American government wasn’t satisfied with the distribution channel for the digital yuan or its use to avoid penalties. While most people were quick to dismiss the notion that the digital yuan might usurp the American dollar soon, the U.S. Government isn’t willing to take any chances as it considers the long-term effect of the digital yuan on the U.S. Dollar.
China’s Crypto Ban Not Waning
While China keeps improving on the development of its digital yuan, Chinese authorities are restricting their citizens from using other digital currencies in the country. After banning crypto exchanges four years ago, the country’s leadership has now prohibited banks and online payment services from providing crypto-related services to their customers. However, they are finding it difficult to enforce this ban because cryptocurrencies are borderless and decentralized by nature. As a result, the Chinese crypto community now uses decentralized exchanges and over-the-counter platforms to continue their cryptocurrency transactions.
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