The Chinese Central Bank is preparing to take its first steps in 4 regions to implement the national digital money project. The planned regions also include cities where the 2022 Winter Olympics will take place. Although no official date has been set for the Chinese digital currency, a source that does not want to be named and close to the subject has learned that the pilot program will now be executed in a closed manner.
With the statement made by the Ministry of Commerce, China announced that it has accelerated its efforts for its digital currency. According to information from a new source, the plan will be limited to 4 regions for the first phase and will be small scale for now. The digital currency will be tested in Shenzhen, Chengdu, Suzhou, Xiong and some other regions that will host the 2020 Winter Olympics.
Zhu Taihui, a researcher at the National Institute of Finance and Development, said the technical design for the digital yuan has changed several times, but the ultimate goal is to partially change the cash circulation model. The researcher stated that both citizens and foreigners can register to the system via their e-mail addresses, have a wallet and use the digital yuan. It is thought that such a system can move the digital yuan to another position internationally.
Exercise Before Large Audiences
Authorities say that there are some problems for the digital money project to be opened to the general public and adopted by the masses. It is thought that some technical moves and marketing projects should be developed in order to explain and familiarize people with the digital money issue, which is still far from most people at the moment. Analysts also predict that the planned steps should be followed strictly by the authorities.
While the Ministry of Commerce listed the regions where the digital yuan will be tested with its latest report, in its statement, it emphasized that the success in the pilot regions will be taken into account in order to legitimize this as a large-scale application.
Currently, digital yuan usage tests include salary payments to civil servants, public transport services, and the energy trade chain. Yang Dong, head of the Financial Technology and Blockchain Research Center at Renmin University Institute of Law and Technology, said that most applications are designed for consumers; He said that usage for businesses should be improved.
Online payment services in China were monopolized by institutions such as Alipay and WeChat. These two giant organizations were doing the money transfer with a simple code scan. Emphasizing that the digital money to be issued by China should be in competition with these two institutions on issues such as speed and transaction cost, Yang said that otherwise, it is difficult for the central bank to find users for digital money services.
Yang said that NFC (near field communication) technology could be preferred for digital yuan. But for this, new stations should be established; stressed that this is a more costly procedure. NFC technology can be summarized as “near field communication” and can be summarized as being able to perform online transactions within the presence of two devices close to each other. As a solution to these high costs, Yang said the Federal Reserve might consider third-party-controlled payment platforms.
What Will the Digital Yuan Do?
The Chinese government plans to control the markets more effectively with this national digital currency. Easier tracking of capital inflows and outflows in China is among the aims of the Central Bank. At the same time, the digital yuan is expected to play a major role in preventing illegal business. The financial activities of terrorist organizations or situations such as money laundering can be easily monitored thanks to digital money.