I mentioned this project of the Chinese Government few times before and it seems every pieces seems to assemble making its launch just a matter of time. If you aren't aware of it : China decided few months ago to test a project concerning the Numerical Yuan, it aims to be a currency only based on the blockchain technology. It was first developed in answer to the financial problems caused by COVID-19 but it appears it has now become an international concern.
This currency is currently being tested in 4 cities in China and some indicators show that its official launch could happen in the coming weeks. It will be a giant feet for our future financial systems and will possibly mark the beginning of the end for cash in our world. Let's go right into it.
1. What the Chinese government stated so far :
Few pictures concerning the Digital Currency Electronic Payment Application have been leaked and as a result the government had to give answers so they stated that the Numerical Yuan was tested on this App in Shenzhen, Chengdu Suzhou, and Xiongan. Two days ago they added that for now it's only tests, that they don't have any date of release in mind and that they don't exactly know if they will launch it at all.
For now we know that those tests are still in progress and we also know that the government wants also to use it during the Winter Olympic Games in 2022 which will take place in Pekin. They assured that they needed to be sure and to fully validate if the system is completely reliable and stable. However the Chinese government seems to play it slow, it appears that some threats will force them to launch it as soon as possible.
2. What is pressuring China to release this Numerical Yuan :
Indeed some Chinese business man revealed that some issues are accelerating the things, especially from the US. Although the US didn't list Chinese companies and financial institutions on its Entity List, they can still pose serious threats to Chinese institutions and have an impact on the Yuan’s position in international settlements. As a result this Numerical Yuan managed by the state, could be deployed sooner than expected, to counter a possible US barrage.
In addition to this US threat there is the COVID-19 crisis like I said previously, the economy isn't doing well in result of this crisis so new solutions have to be found and it appears cryptocurrency and numerical currency linked to a blockchain is the number one on the list. This technology also responds to the "fear of cash" brought by COVID-19, indeed more and more people avoid cash because of the contamination risks it presents. For example VISA has recently decided to register all their cash money in a blockchain and wish to not use cash anymore in the future.
What we can learn from all this is that the current crisis has participated in the rapid increase of the cryptocurrency's democratization. More and more major companies like FaceBook for example are turning towards cryptocurrency and their blockchain technology, but also governments like China or the USA, it reveals that our world is evolving in a different direction concerning our future financial systems.
To conclude I will say that this Numerical Yuan could be a massive turning point, we are getting closer and closer from the full adoption of digital currencies. The blockchain technology brings something new, something different and it is exciting to know that it could be fully part of our daily lives in the future. Let's just see what the future store for us.