To acquire more influence over how people spend their money, China aims to unshackle the global financial system from the US dollar. Using digital money, the company hopes to accomplish both goals.
What About The Digital Yuan (China Coin)?
Earlier this year, after years of planning, China began a large-scale trial of a china coin. A total of three hundred million dollars in transactions have already been processed through four pilots in the People’s Republic of China. If the scheme is rolled out across the country, China will surpass the European Central Bank as the economic powerhouse to offer national digital money.
Chinese officials have said that digital money will make purchasing goods and services easier and safer in the future. Those without bank accounts or other usual banking options may also benefit, according to government officials.
Even though cashless transactions are already commonplace in China, the vast majority of the country’s digital transactions still take place on privately held applications and platforms, which are not regulated by the government.
With an official china coin, Beijing would be able to gain unprecedented insight into people’s lives and their spending habits, which runs opposite to the intended purpose of online money back then. The decentralized blockchain technology used by other digital currencies like Bitcoin ensures that no particular people or person has control.
A professor of business at the University of South Carolina Aiken, Frank Xie, explains that China’s surveillance and control of the economy and society can be bolstered by using the digital yuan. “There is an increase in the ability to consolidate power. Because of this, it’s possible the state has been urging and rushing its implementation.”
Maintaining Order In The Digital Economy
According to the People’s Bank of China, the effort to build digital money starts back in year twenty fourteen. The concept was studied for six years before trial projects were launched in Chengdu, Suzhou, Xiong’an, and Shenzhen this year.
The china coin, like cryptocurrencies, makes use of some of the blockchain’s capabilities: A ledger maintained electronically keeps track of every transaction. According to vice governor Fan Yifei, some of the current cash in circulation will be replaced.
The creation of digital money has other benefits. The government would be able to better control the country’s monetary supply if the yuan were more easily traceable. Chinese officials are pleased since they are trying to limit private tech companies and digital payment systems’ growing impact on the country’s financial system.
At the time, the Chinese central bank did not explain why it was creating digital money. Since the central bank has stated that it is concerned about the rapid development of digital technology, the existence of the program has only recently come to light. Alipay and WeChat Pay, the two largest Chinese online payment services, have grown significantly in popularity in the previous decade, prompting questions about whether private corporations have too much control over Chinese digital transactions.