China has come up with its own digital currency — Here’s what all you need to know!
~ China introduced its own Central Bank Digital Currency (CBDC) called e-CNY or digital CNY. It used its new payment system known as Digital Currency Electronic Payment (DCEP) to create the same.
~ Inception: It was first introduced in May 2020 in 4 cities — Shenzhen, Suzhou, Chengdu, Xiongan.
~ Is it the same as bitcoin? No! Unlike bitcoin, which is not controlled by any central authority, e-CNY is controlled by PBOC. Bitcoin is also based on a technology called Blockchain. At this point in time, it is unclear what kind of technology is e-CNY based on.
~ How will it work? Distribution will happen via two levels:
- The People’s Bank of China’s (PBOC) will distribute CBDC to commercial banks.
- Commercial banks will further be responsible for distributing it into the hands of consumers.
PBOC aims to replace some of its circulating cash with its latest digital Yuan.
~ How will it compete in the local market? The digital currency will be directly distributed into state-owned bank users’ wallets, thereby bypassing apps like Alipay & WeChat Pay. These apps currently rule China’s online payment market.
~ The digital Yuan will also help the Chinese government to weed out tax evasion, money laundering and other financial illegal activities. It’s also trackable and could be traced.
~ Major concern? Since it’s trackable and traceable, the government will be able to monitor each and every important/ big financial transactions, thus raising privacy concerns.
>>> Stay tuned for more such updates & quickbites!
You may also like:
The Need of The Hour — Central Bank Digital Currency!
NFT in a Nutshell!
