By Hassan Mehmood (Saudi Arabia)
Digital Yuan Update
China is one of the largest economies that come up with its central bank digital currency. Financial experts speculate the digital yuan can pose a threat to the reserve power of the US dollar.
China’s CBDC is going through the testing phase, which is designed to check out usability. It is being tested in a few cities of the country so far, and the results are excellent. This month, 100,000 residents of Shenzhen claimed $31 million in digital currency due to distribution via lotteries. The residents can now use ATMs to cash out digital yuan.
Physical Wallet Cards
Besides online wallet availability, the Postal Savings Bank has also rolled out wallet cards. Physically available wallet cards are easy to use by older people or those residents who are not comfortable with the whole electronic money system.
Alipay, a third-party online payment system, has gained a green signal from the Chinese government to strengthen the infrastructure for the digital currency payment network in Shanghai. Participation from the privately-owned tech companies could make a rapid adoption throughout the country.
As the Chinese government has sped up CBDC development, financial experts claim China is striving to become the leading country in the list of digital economies. Kevin Desouza, professor of technology and business at the Queensland University of Technology, explained that China struggles to make its currency more potent in the international markets by making significant progress in the digital world.
Also read:Recently, a People Bank of China’s official clarified that the digital yuan would function similarly to banknotes and coins. Throughout 2020, the central bank managed to run pilot tests in four areas, including Xiong’an, Shenzhen, Chengdu, and Suzhou. As reported by the Beijing Review, five more regions are selected for testing in 2021. These five regions include Dalian, Shanghai, Changsha, Qingdao, and Hainan.
User Privacy is Vulnerable
The government has addressed all issues related to usability and easy consumer access. However, users’ privacy will be compromised as the government can trace all transactions made with the digital currency.
The users can transact in DC/EP without having an internet connection. This feature can benefit those people who have not access or having weak accessibility to the internet connection. The government claims the digitization of the financial world could help remove poverty from China.
The United States will have to work hard in rolling out the digital dollar. Otherwise, they must have ready to lose the market.
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