“A cyber yuan stands to give Beijing power to track spending in real time, plus money that isn’t linked to the dollar-dominated global financial system.”
China has had significant success testing the digital version of its currency, the yuan. China announces successful test of digital currency in Suzhou, near Shanghai.
One lakh 81 thousand citizens of this city were given 55 yuan ($ 8.85) in digital currency and spent from May 1 to 5 in some shops. It was part of the People’s Bank of China’s campaign to test digital currency in front of 500,000 people in 11 Chinese states. Under this, the citizens selected by the bank are asked to download the app in the form of a digital wallet, from which they get discounts when buying goods in thousands of shops in their city.
The digital yuan is the digital form of the Chinese currency, the yuan, which seeks to operate through blockchain technology. Blockchain is a technology that automatically puts data online, allowing you to keep track of who has what money. Cryptocurrencies such as Bitcoin and Ethereum are also based on this technology. However, the technology being tested in China is ‘permitted’. This means that the People’s Bank has the right to control who is allowed to use the money.
A similar small test was conducted in China in 2020. But this time the test is 10 times more than last year. China is conducting similar tests not only in its hometown but also in Hong Kong, developing technologies that can be used in international trade. Initially, a digital currency platform is being developed for trading in Thailand, the United Arab Emirates and the Bank of International Settlements.
According to the test, China will be the first country to fully deploy its currency in ‘permitted’ blockchain technology. While it is not certain when this achievement will be achieved, it will be a huge success within the next one year. In contrast, the major Western banks, the Federal Reserve Bank, the Bank of England and the European Central Bank, have been slow to digitalize their central banks.
They are concerned that the adoption of blockchain technology will affect the right to privacy as transactions can be viewed in public, and that the future of banks will be affected when digital currency is used.
