China’s CBDC Project Breaks New Ground As e-CNY Sees Boost
Central bank digital currency (CBDC) development is gathering pace, with China leading the way toward implementing its use for settling transactions. In a new development, the Chinese digital Yuan (e-CNY) broke new ground after it was used in settling import taxation and cross-border transactions for the first time.
Digital Yuan Makes Headway
According to local news media outlets, the Chinese city of Guangdong has begun issuing e-CNY import tax refunds. The media platform revealed that the local tax agency miscalculated a purported import tax bill for a power and electrical supply merchant.
As a result, the firm was due for a refund of $1,035, which the tax body paid to the firm’s corporate wallet in digital Yuan. Moreover, the report noted that Guangzhou and other cities which were part of the e-CNY pilot test had unveiled their digital Yuan and tax refund services targeted at domestic valued added tax and corporate income tax.
The report added that the new development allows local treasury departments throughout China to handle and manage e-CNY tax refunds seamlessly and efficiently.
Elsewhere in Zhuhai, China, one individual reportedly became the first Chinese citizen to use digital Yuan to pay a parcel tax from Macau. Parcel taxes in China often include customs, import VAT, and consumption taxes.
This latest event from Zhuhai signifies the use of digital Yuan in cross-border transactions for the first time since the nationwide ban on digital currencies began.
According to reports, the Chinese citizen was shopping in Macau (a colony of China with its administration and economy) and decided to pay for the goods with the digital Yuan. Thus, he becomes the first person from mainland China to do so.
e-CNY’s Convenience
According to the CCTV report, the man stated that digital Yuan payment is more seamless and easier and eliminates the time spent in queues. He noted that he only scanned the QR code using the mobile digital Yuan app developed by the Peoples Bank of China (PBoC).
Chinese officials claimed that the emergence of the CBDC payment system has significantly increased the payment system’s efficiency and transaction time. The officials noted that offshore use cases for digital Yuan are gaining traction as part of the extensive CBDC tests in Macau and Hong Kong.
China currently leads the way in CBDC development and innovation as several jurisdictions indicated their interest in establishing digital tokens pegged to national currencies after China’s move.
According to analysts, China has the edge over other countries because it reportedly started its CBDC project in 2014. Conversely, the United States of America and many European counties are lagging in CBDC development.
Meanwhile, the EU is awaiting the passage of the Market in Crypto Assets (MiCA) bill before making a further push in its CBDC development.
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