The Chinese government has begun an experimental program for the digital form of its currency; the Chinese Yuan in April this year in the cities of Chengdu, Shenzhen, Xi’an, and Suzhou. This testing is expected to take place at a large level during the Winter Olympics in Beijing in 2022.
The digital form of yuan which is, the virtual yuan is expected to strengthen the Chinese government’s control over the financial systems of the country. The virtual yuan is designed as an electronic form of a coin or a banknote and can be used digitally faster and quicker than the physical notes and coins. The major matter that the authorities need to be cautious about is that the virtual yuan is not uprooting other forms of money. The initiative is in direct competition to the most successful technology giants of China which include Tencent Holdings Ltd and Alibaba Group.
The digital currency has aroused a concern to the financial dominance of the United States even though it might take years for it to be rolled out nationally. The virtual yuans might allow the digital currency to move across borders without it going through the dollar-based payment systems. It may also allow countries like Iran to evade the US sanctions or move it away with them noticing it. On the other side, some are of the view that this digital currency of China might not pose a threat to the US as every single commodity from oil is priced in US dollars.
When the digital currency rolls out nationwide in China, people will be able to exchange currencies using digital wallets, thus eliminating the need for bank accounts. This would enable the 225 million people of China who don’t have bank accounts to get the benefit of the digital wallets thus triggering development and reducing fraudulent activities. The People’s Bank of China (PBOC) which is the central bank of China will track and keep a record of where the virtual money goes.
Chinese authorities feared that the huge portion of their economic activities would go out of their control with the rise of cryptocurrencies like Bitcoin and Ether and have suppressed its use. Soon they started realizing the potential of its digital currencies in 2014. This move has another intention from their part which is to become a global leader.
Keywords: Virtual Yuan, Digital Currency.
Links attached:
3. https://www.passionateinfinance.com/new-strategies-by-banks-and-nbfcs-for-loan-collection/
4. https://www.passionateinanalytics.com/amazon-gets-patent-for-blockchain-based-supply-chain-system/
