By Shelly Melancon (Switzerland)
US companies have reportedly been put under pressure from China to begin accepting its Central Bank Digital Currency (CBDC), the digital Yuan. This comes a mere four months before the Winter Olympics which will be held in Beijing, China starting on the 4th of February 2022. China is set to become the only country to host the Olympics and Winter Olympics consecutively.
China is leading the race to deploy and adopt CBDCs, having launched the digital Yuan in August and achieving a circulation volume of over $30 million within a few weeks. China is now seeking wider adoption and has reportedly asked American companies with business presence in Mainland China to begin accepting the digital Yuan from customers as a legal tender.
What are CBDCs?
CBDCs are digital tokens of the legal tender or currencies of countries. They are issued by Central Banks under the authority of the government and carry every transactional power and capacity of the fiat currency in use in the issuing country. The idea of digital tokens has received speedy progress following the expected surge in cryptocurrency use across the world.
Governments around the world are looking to create digital tokens that are deployed within their domain so that they can exercise full regulatory powers over them, in opposition to cryptocurrencies that are largely decentralized and are difficult to regulate since they are not the domain in any country or government.
Also read:American fast-food company McDonald’s, fintech company Visa, and fashion brand Nike are all reportedly under pressure to begin accepting the digital Yuan across all their business locations ahead of the Winter Olympics. McDonald’s is said to be the most pressured since they offer day-to-day consumer food and are heavily patronized by Chinese residents. China is increasing pressure on them to begin accepting the digital Yuan as part of its initial test phase for the CBDC project.
If China is successful in making these brands adopt the digital Yuan, analysts predict the nationwide adoption will increase. But McDonald’s and the other giants will be wary of accepting the digital token without consent or support from the United States government. China’s digital Yuan is predicted to make up 9% of China’s financial transactions by the year 2025, according to industry experts. China is now pushing for international recognition of its digital Yuan for trade and commerce.
CBDCs And Cryptocurrencies
China banned cryptocurrencies and cryptocurrency trading in September and said it was going to enforce the nationwide ban. The crypto industry considered the ban as part of efforts to ensure that the launch of the Chinese CBDC that was announced earlier was successful.
The Chinese government favors the digital Yuan more than cryptocurrencies because it is regulated and completely under the control of the government. The latter reason is worrisome to foreign companies because the government can easily remove or block transactions without prior warning. The safety of cryptocurrencies from government intervention is the most alluring feature of the industry; one that digital tokens lack.
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