TECHNOLOGY
ANALYSIS
CHINESE ECONOMY CHINESE DIGITAL MONEY
A digital currency will allow China to track spending in real-time, along with the money that is not linked to the dollar, which has become the yardstick of financial measurement
China’s digital yuan could be the future of money JESSICA SMITH
Around thousands of years ago, when the only form of currency the world knew were coins, China invented the paper currency. Come 2021 and the country is again leading the race when it comes to digital currencies. What’s being debated is whether The Xiong’an China’s CBDC project have branch of the the capability to shake the Agricultural pillars of American power? Bank of China Well, one can argue that in Hebei money has already become launched its virtual ever since credit first digital cards and digital payment yuan-based apps such as PayPal, Google hardware Pay, WeChat have come very wallet close to eliminate the need for physical currency, but in its essence, those are just ways to move money electronically. What China is doing is turning the legal tender into a computer code. Cryptocurrencies such as Bitcoin, Dogecoin, and Ethereum have already shown a potential digital future for money, though they exist outside the traditional global financial realm and are yet to become the legal tender. However, China’s version of digital money will be controlled by its central bank and the same body will also issue the new electronic currency. This is
14 | May 2021 | International Finance
expected to give the Chinese government major new tools that will help them monitor both its economy and its people. Additionally, the digital yuan will also cancel out one of bitcoin’s major drawbacks, i.e., anonymity for the user.
China is leading the digital currency race China is fairly far ahead when it comes to the testing the digital yuan and has done these tests in several regions in the past year, along with setting up a legal framework for the CBDC with the help of various global finance regulators. Xiong’an is one of the first four regions that debuted China’s CBDC. The Xiong’an branch of the Agricultural Bank of China in Hebei launched its first digital yuan-based hardware wallet which was developed by the Party Working Committee of the Xiong’an New Area and the PBoC’s branch in Shijiazhuang in February 2021. Recently, China took a major step in its central bank digital currency (CBDC) tests by debuting blockchain-enabled salary payments with digital yuan at Xiong’an. One might ask why there is so much excitement surrounding the Chinese digital yuan? Well, it’s primarily because tokenised money is completely controlled, similar to physical cash. People might use an ATM to draw the amount of money needed from our accounts, but as soon as we do, the bank
