We know about all the controversy that has surrounded Libra on Facebook since the announcement of the cryptomoney project. However, there are other projects that have made progress and that generate the same or higher level of expectations. One of these is China, which is testing the idea of its first official digital currency. Here we tell you more details.
The People’s Bank of China started a pilot program to test the central bank’s digital currency (CBDC) in four cities: Shenzhen, Suzhou, Chengdu and Xiong’an. They have also declared that the cryptomoney will be used in limited quantities and as part of the preparation for the Beijing 2022 Winter Olympics.
They also highlight the fact that starting this month, some Chinese government workers will receive a portion of their April salaries in this cryptomon currency. This is distributed through an application on their phones.
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China is a country where payments with smartphone applications have become increasingly common, replacing cash payments. Therefore, a crypto-currency is not a concept so far removed from reality for them.
China is generating expectations for the development of its digital currency, as this country’s incursion into the creation of a cryptomoney demonstrates the progress of this industry worldwide. Source: Forbes.
China generates expectations for the development of its digital currency, since the incursion of this country in the creation of a cryptomoney shows the progress of this industry worldwide. Source: Forbes: Forbes.
Initially, this idea will help the Chinese government to track financial transactions. This serves to prevent corruption, money laundering and even tax evasion. However, it may extend beyond its original use.
As expected, this crypto currency will be linked to the yuan. Thus, consumers and businesses will be able to exchange this currency in their bank accounts, and in their WeChat and Alipay wallets, for the cryptomone and vice versa. What there will not be is a paper issue by the CBDC.
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The Chinese state argues that a sovereign cryptomoney would also mitigate the impact of international sanctions. Reducing the fear of threats of exclusion at the country or company level.
In addition, a krypton currency can „facilitate integration into globally traded currency markets with a reduced risk of politically inspired disruptions. This argument has also been applied to other stablecoins in the market.
The People’s Bank of China and
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also said that an official digital currency will safeguard foreign exchange sovereignty and boost the global use of the yuan. The latter refers to the fact that the yuan represents only 2% of world payments and reserves.
Meanwhile, an estimated 60% of all foreign exchange reserves in the world are in U.S. dollars, giving this currency some pre-eminence in the international market. It also gives them power over the global financial system and strengthens the effects of their imposition of sanctions.