The new Chinese digital currency had been studying for a few years already, precisely since 2014, but now China is accelerating the introduction of the new national digital currency.
The Central Bank of China introduced it on April 21 experimentally in four cities: this is an important stage of the pilot project marking a milestone on the way to the first electronic digital currency issued by a large National Central bank.
Cities testing the new digital currency now in course are Shenzhen, Suzhou, Chengdu and Xiong'an, a city Beijing satellite.
The new currency, which does not have an official name but is known by its internal abbreviation "DC / EP", or "digital
currency / electronic payment, will share some features with crypto currencies, including Telegram new crypto and Facebook Libra.
Even if Chinese authorities historically don't get along with anonymity, now China has stated that the Central bankers have pledged to protect privacy of users. The intention is to replace a part of the Chinese monetary base, or the cash in circulation.
In short, the new digital currency will not replace other parts of the country's money supply, such as bank deposits.
But the stage undertaken today assumes significant importance especially in view of the 2022 Winter Olympics in Beijing. For its part, the research institution headed by the central bank specified that digital money will not be issued nationally or in large quantities in the short term while ensuring that the test execution will not trigger inflation.
In Xiangcheng, a district of the eastern city of Suzhou, the government will begin to pay public officials half of their salary in digital currency.
Employees just need to install an app on their smartphone: will be able to use the new currency directly for transactions with certain designated merchants.
China is ahead of many other countries in the preparation for the launch of an official digital currency.
In the land of the Dragon in the past
years, the use of traditional paper banknotes and the cash has gone down dramatically, and payments through
smartphones have become so huge in everyday that many Chinese, especially the younger ones, no longer carry with them wallet or cash for shopping. In reverse, they use WeChat Pay and Alipay of Tencent Holdings Ltd., managed by Ant Financial Services Group, an affiliate of Alibaba Holding SA.
The Central Bank of China claimed that the move to a government-operated digital payment system will help
fight money laundering, gambling
and the financing of terrorism. Not only that, but in his opinion, digital currencies are also a good way to improve
the efficiency of transactions in its financial system.
The development of digital currency is also encouraged by the four major Chinese state banks such as
Agricultural Bank of China Ltd.
Online operations are more and more frequent, and more and more sophisticated allowing
a variety of functions, including that of enabling savers to track new transactions
currency, to manage their accounts and to connect the portfolio to their existing bank accounts.
The acceleration in the development of the project would have been impressed after Marc Zuckerberger's decision to launch the Libra project, a project that the government has never liked to be opened in the country of the Dragon. A few months ago, the Global Times tabloid (very close to the Beijing government) had described her as one
"potential threat" to China's financial sovereignty.
In this sense, the digital currency regulated by the Bank Central could be, for Beijing, the right answer if not the best one in my opinion.