China Proposes Setting Up CBDC Exchange for Digital Yuan
The People’s Republic of China once again, is making a move to drive adoption of its CBDC. This time around, the Asian powerhouse is making plans to set up an exchange for digital Yuan.
Bloomberg reports that the State Council came up with a set of guidelines that suggests China is making a move to establish a bourse for eYuan trading in a bid to enhance financial services. While China is bringing up some initiatives to speed up eYuan trials alongside encouraging banks to set up e-CNY platforms for utilization, the State Council is yet to clarify the details about the proposed CBDC exchange.
China’s CBDC Program Is Met with Challenges
It’s no news that China’s dislike for cryptocurrencies is fueled by their unregulated nature and high volatility rate. On numerous occasions, the country has implemented anti-crypto laws and banned the use of the assets for transactions since the emergence of Bitcoin in 2009.
One of the main reasons the country clamored for a CBDC and banned cryptocurrency was to safeguard consumers and the economy. China once said that cryptocurrencies lack any form of control and aren’t backed like gold, which makes it risky to have as a store of value, putting the investors in a position of becoming poorer.
China first set up a committee to look into CBDC back in 2014, the first country to do so when cryptocurrency was rarely adopted by businesses outside Asia. This was set up in a bid to provide an alternative to virtual currencies, which was increasingly becoming popular in the country as a medium of exchange.
However, the country’s CBDC journey hasn’t been very smooth and has been met with challenges. Earlier this November, Chinese authorities arrested 11 suspects for being involved in a CBDC scam.
It was later discovered that the digitized fiat currency was used as a medium of exchange to launder money for a group who is based in Cambodia. This was the first CBDC scam ever reported.
China Assures e-Yuan Users of Better Privacy and Anti-Counterfeiting Features
The CBDC scam instigated tensions and put fear in the users of the digitized Yuan. However, the Chinese authorities assured users that they would strengthen security protection and enhance anti-counterfeiting features of the CBDC. In addition, the authorities assured the public of better interoperability with the current payment infrastructure.
Alongside these, China has vowed to continue its CBDC trials. The central bank governor Yi Gang revealed that they would continue to improve the design of the eCNY and its use prudently.
China is one of the first few countries to have its CBDC already rolled out. Nigeria is another that launched its CBDC, the eNaira, in October. The European Union alongside the United States are still considering launching their CBDCs, with the former opening a two-year investigation.
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