Digital Yuan — All You Need To Know About China’s Latest CBDC!

Digital Yuan — All You Need To Know About China’s Latest CBDC!
ConsumerTech Tech

Digital Yuan — All You Need To Know About China’s Latest CBDC!

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:

  1. The People’s Bank of China’s (PBOC) will distribute CBDC to commercial banks.
  2. 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!

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