China’s central bank to test digital Yuan.Will it pave way for CBDC’s?

The digital yuan is all set to be tested on the platform of Chinese food delivery giant, Meituan Dianping -a major step towards token's mass adoption.

By · Jul 15, 2020 . 5min read

Photo by Macau Photo Agency on Unsplash

According to Ling Zhang, the Chinese will soon begin testing the digital token Yuan. Meituan Dianping, backed by Tencent Holdings, and Didi Chuxing will be the first two platforms where the currency will be tested. The former is a food delivery service whilst the latter is a ride-hailing startup. The platforms boast over 500 million users.

The duo offer a wide range of services that include everything relating to e-commerce, videogames and food. The People’s Bank of China has been closely working with Meituan to roll out the digital currency. The country has been working on the digital Yuan itself for almost six years. Although, a national roll-out is not expected for atleast another year whatsoever.

China will become the first major country to start using a Central Bank digital currency (CBDC). Morever, several other countries are also working on their own version. Canada posted about a job opportunity for project manager of their CBDC earlier this year. Facebook’s announcement of it’s stable coin Libra triggered lot of traction over the year.

Central Bank to acquire more power to track money with Digital Yuan

China’s digital Yuan will however not compete with Bitcoin. The US dollar will be it’s main competition instead. Moreover, China has always wanted to splinter the supremacy of dollar from a long time. CBDC’s, after all are heavily centralized. The Chinese government will enjoy a degree of control if the nation as a whole decides to adopt the digital Yuan in the coming years. Whereas this would never be possible with physical money.

The Chinese government borrowed heavily from blockchain technology while designing the payment system that will facilitate it’s CBDC. Yet, the digital Yuan and Bitcoin are world apart in terms of their scope and nature. China’s Yuan is interested in control and centralization of power. Bitcoin is all about decentralization and empowering individuals. In conclusion , the rise of independent currencies like Bitcoin & Ethereum will be a challenge for policymakers in order to track economic activities.

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