China is about to launch one of the most revolutionary financial projects in the world. It is turning its physical coins and banknotes digital. Unlike most other cryptocurrencies like Bitcoin that work outside the control of a central authority, the digital yuan will be the first state-owned digital currency issued by the Central Bank.
Moreover, you can use digital yuan anywhere as it works exactly like cash. The only difference is that this is on your phone. The more intricate details of the characteristics of the digital yuan are still being chalked out by the government. However, the change remains a pioneering one nonetheless.
Digital Yuan Will Work With Major Payment Wallets, Mentions Chief Bank Executive
Recent reports suggest that the digital yuan will be compatible with major payment methods popular in China. These include payment wallets WeChat and Alipay. A head official from the People’s Bank of China validated this claim in one of his recent conference statements.
Mu Changchun is the head of the digital currency research institute of the People’s Bank of China. He said that the digital yuan will not be competing with other payment methods like WeChat and Alipay. In fact, these mobile payment wallets will make digital yuan a friend in their wallet. He explained the major difference between the two. Payment wallets like Alipay and WeChat are fundamentally different, he says, as one is the wallet and the other is the money inside that wallet.
These reports however do not match with the earlier reports regarding this recent centrally-backed currency. Previous reports on the digital yuan majorly stated how China was launching a new cryptocurrency that is to be the new alternative to payment giants like WeChat and Alipay. But more recent information on the case seems to clear out much of the haze regarding digital yuan.
Digital Yuan Characteristics Are Still Taking Shape
This digital currency is however not accessible to everyone yet. Digital yuan is still enjoyed by a limited section of people who have installed an application exclusive to digital yuan. But this has caused a lot of problems related to digital yuan. The currency currently faces the same-old issue of counterfeiting. Bank executive Mu Changchun states that several digital yuan fake wallets have crept up in the market that can only be reduced if the Central Bank along with the users take preliminary caution.
On another note, Mu Changchun stated that the digital yuan is different from other cryptocurrencies like Libra (Facebook) or BTC (Bitcoin). The latter are private cryptocurrencies, he mentioned while the innovative Digital yuan operates on an infrastructure that is completely centralized.
The digital yuan work is rapidly progressing with China setting up frameworks to ensure the smooth functioning of digital yuan. The country has recently published a draft bill related to the framework and regulations of digital yuan and CBDC is currently conducting pilot tests to check the efficiency of digital yuan.