Digital Yuan has accelerated in China in recent months
Amid the chaos surrounding financial markets and global economies, China introduced its digital Yuan, the first cryptocurrency owned by a central bank. The new digital currency, which according to Chinese authorities is just a digital version of the Yuan and does not replace it, has been tested in four Chinese provinces in recent weeks.
Consumers in Shenzhen, Suzhou, Chengdu and Xiong’an can now use the virtual wallet application provided by the Chinese government to make payments at several stores declared on a list issued by the People’s Bank of China, including American chains Starbucks, McDonald’s and Subway .
The new currency has been under construction for more than a year and has been tested through a pilot program since mid-April. Government officials are expected to receive parts of their monthly payments using the new cryptocurrency also this month, and will be able to access it through a digital wallet designed especially for digital Yuan transactions.
However, the Chinese government emphasizes that the new digital Yuan is only intended to make monetary transactions as cashless as possible, insisting that it does not replace Chinese currency or challenge digital wallets.
Cashless payments have been widely used in China in recent years. According to the China Internet Network Information Center, more than half of the population has handled digital wallets in recent years, using apps like Alipay and WeChat Wallet.
Due to their fast and easy access, digital wallets have grown in popularity around the world, including China. In addition, digital wallets are expected to see a worldwide increase in use after the COVID-19 pandemic, as they serve as a secure payment option.
However, the official announcement of the Chinese digital Yuan has faced many questions and concerns about when it will be launched and whether it will be a safe option for everyone.
Experts noted that China’s surveillance record suggests that the wallet application, developed and controlled by the Chinese government for transactions using the new cryptocurrency, will facilitate the tracking of citizens, as it allows them to monitor all their financial transactions, especially if they do not provide the same anonymity offered by other known cryptocurrencies.
Analysts who question the reasons behind the virtual Yuan also suggest that the Chinese government has accelerated its processes to launch the new currency at such a critical time, in order to compete with Facebook’s Libra currency, which has not yet been launched.
In addition, the first digital Yuan was perceived as a Chinese attempt to compete with the dollar’s dominance over international finance, after its traditional currency failed to challenge it for decades.
Source: Albawaba Business