China this year launched a new ‘digital yuan’, which is controlled by the country’s central bank.
While the authorities have encouraged mass adoption of digital currency, according to government media reports, a central bank official has said that Beijing will follow strict privacy laws and the digital currency electronic payments (DC/EP) or use of e will protect personal information. -CNY.
When the digital currency was launched and China released a beta version of the Digital Yuan app for Android and iOS on the local app store earlier this year, it was speculated that the move was meant to keep the Chinese government under watch. Will give a wide range of new capabilities. on both its citizens and its economy.
However, as recently reported, Mu Changchun, director general of the central bank’s Digital Currency Research Institute, said that the limited anonymity of the digital yuan is an important component and that it provides reasonable anonymous transactions.
Additionally, he said it upholds the demand for financial security by preventing and combating illegal acts such as money laundering, terrorist financing and tax evasion.
China believes that the e-CNY, issued by the People’s Bank of China, will be a traceable alternative to banknotes and coins and can be used to buy anything. For example, Mu said e-CNY could be used to acquire gold and exchange foreign currencies like cash and coins.
It should be noted that to increase transparency and the efficacy of government programs, with more e-CNY usage anticipated in the future, some cities provided free digital cash in May to encourage consumption and hurt by pandemic restrictions. companies can be helped.
chinese digital currency
When coins were the only form of currency, paper currency was created in China a thousand years ago. Now, with a boom in technological advances, China is positioning the digital yuan for worldwide use and designing it to be independent of the international monetary system from which the US dollar has ruled. World War II.
But according to analysts and economists, digitization will not be enough to make the yuan competitive with the dollar in bank-to-bank wire transactions.
However, according to research conducted by Deutsche Bank, this digital currency is being introduced by the PBOC to achieve two separate, but linked purposes.
The first, long-term objective, is to develop a digital currency that can rival others such as bitcoin, stablecoins, and other central bank digital currencies (CBDCs), while the yuan is also known as China’s reserve currency. .
The second, more immediate aim is to replace China’s current payment system by offering a digital payment option that is comparable to cash because it is widely available, inexpensive, somewhat anonymous, and eliminates competition among payment service providers. encourages.
To prevent valuation discrepancies between the digital yuan and paper currency such as coins and bills, the Chinese central bank will strictly regulate its use. Additionally, it stated that due to anti-counterfeiting procedures, it would be impossible for anyone other than the central bank to create a new digital yuan.
In July 2021, the central bank in a document highlighted the fact that one of the benefits of using e-CNY is that it will provide greater security and privacy. In the document, the PBOC explicitly stated how digital currency “uses a variety of technologies, including digital certificate systems, digital signatures, and encrypted storage, to make digital currency “double-spend, illegal duplication and counterfeiting, transaction falsification, and unenforceable”. uses”.
how it works
Digital Wallet, also known as ‘Shuzi Qianbao’ in Chinese, is an online wallet that allows people to track and save e-CNY. It can be accessed using the Digital Yuan app called ‘Shuji Renminbi’.
The Digital Yuan App is the primary way for users to access e-CNY.
On the app, users can create multiple digital wallets and set up settings such as daily spending limits and the apps and services that can be paid with the wallet, as well as link various bank cards.
Foreigners can currently use only restricted functionality in the Digital Yuan app as some ‘high-level’ wallet options require a Chinese ID (those that allow higher spending limits).
Only the lowest-level wallet, with a daily spending limit of 5,000 RMB and an annual spending restriction of RMB 50,000, is now available for sign-up without a Chinese ID.
Inside the country, Tencent, one of China’s leading tech firms, said on April 7 this year that users in 23 test regions would be able to use the digital yuan as a payment option on its social media and payments app WeChat.
To use the digital yuan on WeChat, customers must first register with WeBank, which is Tencent’s online bank.
However, to sign up for WeBank, users must enter a Chinese Shenfengzheng ID number (an official ID document), so only Chinese people can currently access the digital yuan through WeChat.
Additionally, users will be able to send small amounts (amounts will depend on the type of digital wallet they have) to their peers, allowing them to spend the virtual cash in more casual settings, such as paying a friend for dinner. To do or transfer money to a street seller. Since the app supports NFC technology, users will be able to do the same by simultaneously touching their phones.
Furthermore, due to the use of NFT technology, users can spend money in their digital wallet even when they are not connected to the internet.
However, China is not the only participant in this digital currency race.
The Government of India has introduced Central Bank Digital Currency (CBDC) in the budget of 2022 to significantly enhance the digital economy. It is proposed that the Reserve Bank India Will start issuing Digital Rupee based on Blockchain and other technologies.
Later, it was also reported that India would introduce its own digital currency in early 2023 that would be similar to any private company-operated electronic wallet that is already accessible, except that it would be a sovereign-backed facility. . However, unlike the existing mobile wallet systems provided by private companies, the Digital Rupee blockchain is also expected to be able to track all transactions.
read all breaking news And today’s fresh news Here