- Chinaâ€™s Digital Yuanâ€™s development has raised the alarm in several nations like the United States, Europe, and Japan
- Chinaâ€™s central bank has published a draft on Friday to turn their digital currency into legal tender
China is ready to issue its Central Bankâ€™s Digital Currency (CBDC), the Digital Yuan. The most extensive test of Chinaâ€™s national digital currency is over now. Around 8.8 million Yuan ($1.3 million) spent in over 62,000 transactions duringÂ Shenzhenâ€™s trial period.
However, the trial has been completed, still, users left with extra funds can use those at designated shops. This led to around 9,01,000 additional transfer of credits into the official application, the Renminbi app.
Is Digital Yuan a Cryptocurrency?
Digital Yuan cannot be considered as aÂ cryptocurrency. However, it runs on the blockchain network but is issued and managed by Chinaâ€™s central bank. As it is the nationâ€™s currency and operated by Chinaâ€™s central bank, it could be considered as the digital version of Chinaâ€™s physical currency.
Chinaâ€™s Central Banks Effort Coming to Reality
Chinaâ€™s Central bank has been working Since 2014 to launch its Digital Yuan. To bring the digital Yuan on a large scale transportation network, the central bank of china entered into a strategic partnership with the worldâ€™s second-highest valued unicorn startup, Didi Chuxing.
The Central Bank of China chose 28 cities, including major metropolitan areas like Beijing, Tianjin, Shanghai, Guangzhou, and Chongqing, to test its digital currency, Yuan. The bank worked on features like easy transfers and better security of their money. The Central Bank of China distributed red envelopes in a traditional way of gifting cash. The distribution followed in the form of online wallets. Each envelope contained 200 digital yuan and was randomly distributed to 50,000 selected customers.
Alarms have Been Raised in Several Nations
Chinaâ€™s Digital Yuanâ€™s development has raised the alarm in several nations like the United States, Europe, and Japan. All these nations are concerned about Beijing being the dominant force behind such technologies involved in digital currencies.
According to aÂ releaseÂ from the European Central Bank, it is observed that following Chinaâ€™s digital Yuan, the central bank of Europe has also announced the possibility of launching its digital euro. After the European Central Bankâ€™s announcements, the Bank for International Settlements, including seven Western Central Banks with European Central Bank, Fed Bank of Japan, and Bank of England, to guide exploration and support public policies. They published a detailed report of foundational principles and core features of potential CBDC.
Meanwhile, Facebookâ€™s plans have also been revealed about publishing Facebookâ€™s digital coin, â€˜LIBRA.â€™ However, the United States and other regulators have rejected their proposals.
While several nations are yet to commit the launch of their national currency, Chinaâ€™s central bank has published a draft on Friday to turn their digital currency into legal tender. However, the draft also mentioned the ban on issuing cryptocurrencies by private sectors. A new concern will arise in destabilizing the existing financial system.