According to rumors, China’s central bank, the People’s Bank of China (PBOC), aims to deploy a digital yuan by the end of 2020. As a result of the COVID-19 outbreak and Facebook’s Libra, the project is progressing at an accelerated pace. It seems that the People’s Bank of China (PBOC) has performed pilot testing in at least four sites, including participation from American companies. When compared to other countries, China seems to be well ahead of the curve when it comes to the production of central bank digital currency.
There are no restrictions or prerequisites for using the digital yuan by yuan pay group, since the Chinese government retains ultimate control over its use.
The political, informational, and economic interests of the United States and its allies are all threatened by the digital yuan. Among the advantages are assisting China in promoting the yuan as a rival or alternative to the US dollar, allowing China to expand and export its surveillance capabilities by providing a window into and control over economic activity conducted within or outside its borders, and allowing China to circumvent sanctions, arms embargoes, and money laundering regulations by providing an alternative to the existing dollar-based system.
Facebook, COVID-19, And China’s Digital Yuan Are All Generating Considerable Attention
China’s People’s Bank and yuan pay group has been experimenting with digital money since 2014. In China, the money is still officially referred to as “digital currency/electronic payments.” A few of the purported justifications in favor of its implementation include speeding up and decreasing the cost of international payments, combating money laundering, and curbing terrorist funding. However, these are merely a few of the numerous reasons for its pursuit in the first place.
TenPay (WeChat) and AliPay (Ant Financial) handle 93 percent of mobile payments in China, which implies that if their networks fall down or are hacked, there will be the insufficient paper cash in circulation to keep business operating. This may result in the financial system crashing or panicking. Digital yuan, however, would permit direct government monitoring, not just supervision, via TenPay and AliPay.
Chinese authorities accelerated the digital yuan initiative after Facebook revealed its plan to develop its own digital currency, Libra, in June of this year. Libra presents a danger to Chinese currency and local payment networks, according to China’s official bank. Because the yuan is not considered a reserve currency by Facebook, capital outflows might undermine the currency.
To Round Out The Picture Is it possible that in the future, individuals and companies would put their faith in the Chinese government to function as a guardian of their money and privacy? One of the factors that has led to the dollar becoming the world’s most widely used currency is trust. Nonetheless, in order to assure widespread usage, the Chinese government has created a number of successful means for disseminating its money both locally and internationally. To top it all off, the digital yuan has a number of appealing qualities that may entice consumers from all over the world to utilize it. Individuals are frequently prepared to exchange their privacy for convenience, as evidenced in the digital age.