14 Apr 2021 — Paper currency first developed in Tang dynasty China during the 7th century and now in the 21st century, China is introducing a new currency, digital yuan and this has caused anxiety among the world’s largest economies especially for the US.
But why is China so determined to launch its own retail CBDC?
– Helps banks to bridge gap on mobile payment and curb dominance of Alipay, WeChat
– Prevents illegal activities, such as money laundering, counterfeiting, illegal financing and tax evasion
– Allows real-time collection of economic information quickly that provides a useful reference for implementation of monetary policies – Reduces the time for trade settlements and transactions between Belt and Road Initiative partners and other international business and reduces counter-party risks
– Promotes the internationalisation of the renminbi and provides an independent alternative for cross-border payments that does not need to use the U.S. dollar settlement system
– Doesn’t require a bank account to access funds and transactions using the digital yuan can be done without the internet, a big step in helping poverty alleviation as it will be of great benefit to the 20% of adults in China without bank accounts
Image from China Global Television Network