Yuan Coin Payment System: China’s Next Greatest Milestone!
The government of every country is exploring and persevering in different areas to assess the viability of digital currency. According to active reports, almost 70% of the global central banks exert more effort to develop their own coin. But as an ordinary individual, how could you get yourself involved in a vast financial revolution like this? Are you aware of what is going on in your country’s economy? Did you know that you can also acquire digital coins from other countries? Know it better! The Yuan coin payment system is going to get you in the right financial position. 5
What is CBDC?
Central Bank Digital Currency is the general term for digital coins supported by the central bank of a specific country. China was the first nation to launch its CBDC, the Digital Yuan. Its national digital currency program, better known as the Digital Currency Electronic Payment (DCEP), had a grand launch in 2020. The said event includes the largest cities in China. Real-time trials of worldwide transactions lasted for almost a year before disbursing the coins to the public.
What is the current status of China’s DCEP?
During the first quarter of 2020, the People’s Bank of China (PBoC) gave the go signal to conduct trials and tests with regards to Digital Yuan. The regions of Xiong’an New Area, Shenzhen, Suzhou, and Chengdu are the first to experience the benefits of DCEP. Beijing is also expected to participate in the 2022 Winter Olympic Games.
Hong Kong was also confirmed to participate in the said trial. Chief Executive Eddie Yue of Hong Kong Monetary Authority (HKMA) stated that the PBoc and HKMA are planning to assess the functionality of the Yuan coin for cross-border transactions.
The municipal government of Suzhou announced that it is willing to give 100,000 digital coins. Each costs US$30, so the total amount sums up to US$3 million. It is offered to citizens via lottery. Suzhou is actively participating in digital currency tests. Last year, 2020, many government employees were able to receive their transport allowance in the form of Digital Yuan.
The same trial was applied in the southern tech city of Shenzhen. Last October 2020, the city was able to carry out a total of US$1.5 million worth of Yuan coins. Almost two million applicants applied. Only 50,000 of them are lucky to win the lottery.
On the other hand, Xiong’an authorities decided to invite companies such as Starbucks and McDonald’s to test the DCEP. At first, many citizens did not mind transacting via digital coins. The initial result was not that exciting. But as more and more news shows how it could change the economy for the better, people eventually start adopting the coin.
As per Yi Gang, the deputy governor of PBoC, almost US$300 million was spent using e-Yuan. It is composed of four million transactions solely within China’s borders. There are many security features such as facial recognition, bar code, and tap-to-go transactions that residents enjoy.
China lines up more cities to keep expanding the use of Digital Yuan. The leading Chinese news agency, Caixin, announced that the list could extend to Shanghai, Hainan, Changsha, Xi’an, Dalian, and Qingdao.
Giant corporations start to get involved in the DCEP trial period. Didi Chuxing, the country’s biggest vehicle for hire company, is ready to dive in. Meituan Dianping, a food delivery pioneer, welcomes e-Yuan transactions. Bilibili, a video-sharing website, is planning to join the game-changing trial.
Not only that, JD.com, one of the biggest Chinese online commerce, is the first-ever virtual platform to announce its acceptance of Digital Yuan as a form of payment. It may not be 100% applicable to all products, but some products can be bought using Digital Yuan on its online stores.
Of course, when there is a need for innovation and adoption, China’s law is required to catch up and make relevant updates. The PBoc had its revised draft of the People’s Bank of China Law. It intends to coincide the legal foundation with the adaptation of digital currency. The draft suggested that digital currency be considered a legitimate currency. It should have the same legal position as physical yuan. Any institution is not allowed to produce or sell digital tokens just to prevent risks with virtual currencies. The Yuan value will still depend on the flow of the economy.
The Chinese Communist Party recommends having a long-term plan until 2035 to witness the inspiring change of the economy. It emphasized that steady actions are crucial for the digital currency to advance and develop.
How does the Digital Yuan payment system work?
YuanPay Group is a private company responsible for issuing and distributing the Yuan coin to the public. It will channel the Digital Yuan to the end-users for trading and investing purposes.
The said organization opened its YPG platform to help users maintain their Yuan wallets. It gained prominent attention, and thousands of applications keep coming every day. This is just a glimpse of what the process could look like.
Through its top-tier software management tools, your e-Yuan wallet will have a designated wallet ID, remaining balance, current transactions, and so on. It can also be used for payment, transfer, and redemption.
Future impacts of Digital Yuan on community and business industries
China has been transforming into a cashless nation with online transactions amounting to US$48 trillion. Even with technological challenges in its financial system, the country was still able to create its own CBDC.
The future events of China’s DCEP are foreseen to directly complement the businesses provided by Tencent, Alibaba, and WeChat Pay. As we all know, these three are the digital wallet giants of China. It has more than 1 billion active users. Half of it transacts in-store payments, and the other quarter transacts online.
When the plan is successful, the government will achieve one of its greatest wins in the economy. Oh, it must be rephrased! This will be China’s greatest economic milestone. Since Digital Yuan is a centralized currency, the government will surely secure the digital cash in circulation. Money laundering, terrorist illegal financing, and tax evasion can be easily detected. Big-name financers can no longer make use of their wealth to dictate the progress of a country. Digital Yuan gives equal rights to all who aspire to gain wealth through investing, whether you are an average person or not.
Xinhua, China’s media, stated that DCEP would start to implement the principle of controllable anonymity. If the transaction is too good to be true and anonymity is abused at its finest, this is not for you. Digital Yuan allows both parties to stay anonymous and protect their privacy to the public. But if it seems that you are using the network to promote corruption, money laundering, and other illegal actions, the state banks will investigate your transactions to reveal your real intention.
The PBoC will have control over the disbursement of government funds. Yes, they already have the authority to control from back then. The only problem is that they were not able to ensure that financial subsidies went to the right citizens. In the future, it regulates the Digital Yuan in a more directed flow. One of which is to only activate the e-Yuan once transferred to the registered wallet of the beneficiaries.
Are you now overwhelmed?
But wait there’s more! This DCEP could also make conditions to improve unconventional monetary policy. For example, you might not be familiar with this, but China can issue NEGATIVE nominal interest rates. Residents are then forced by this event to withdraw their money to avoid capital devaluation. It’s like a double kill for the country. Imagine having issues in your national economy, and the citizens withdraw their money from reserves. That is not good news at all!
Inside DCEP, negative interest can be applied to digital cash through delicate programming. If all the money is kept inside a network and everything can be accounted for, there is no reason to fear consistent negative rates. Electronic wallets are proven to stimulate the economy.
When all things within China become stable and sustainable, it is now ready to expand overseas. In the future, China can transfer digital money across different countries without converting the currency into dollars. Yes, like the SWIFT payment system. Every country is looking forward to keeping updated with the US dollar every single day. China appears to be in the process of crashing the universal currency.
China will keep the public updated. It will soon confirm the timeline proposals of the Digital Yuan. Surely, after this, many other DCEP will arise from different countries. It is not easy at all for China. But with its vision to be the first cashless nation, everything seems to be possible.
As you can conclude, there are many things going on inside the Yuan coin payment system. It is not created like Binance or eToro. The government and PBoC backed YuanPay Group to start an economic change that offers growth, profitability, and stability. That’s the main difference. If you want to become successful in this industry, then you must start now!