China has recently reported good figures on the use of the digital Yuan by the population and businesses. In experimentation in several cities of the country, Chinese digital money is an undeniable success. Enough to make other countries envious?
The good results of the digital Yuan
China has launched a full-scale testing program for its new digital currency, the digital Yuan or e-Yuan. This currency is currently being tested in various major cities including Beijing, Hong Kong and Macao. Its use is also planned during the 2022 Winter Olympic Games in Beijing.
No, it is not a crypto as such. Unlike most cryptomoney systems (Bitcoin, Ethereum, etc.), the digital Yuan does not work on the basis of a decentralized system. It is produced and completely attached to the Chinese central bank. It is rather a digital variant of the local currency.
And to say the least, it is a success! Indeed, the Chinese central bank has just released figures at an event held in Sibos. It reports more than 3.13 million transactions with the digital Yuan. All these transactions represent a total cost of 1.1 billion yuan. In total, more than 113,300 personal portfolios were opened.
The use of digital Yuan is very varied. At the citizen level, the e-Yuan can be used to pay bills, withdraw money, or make transfers from a smartphone for example. At the government level, it is used to reward medical personnel for their efforts during the COVID-19 crisis.
The future of e-money
There is no doubt that the experimentation of digital Yuan is being closely followed by many countries. Many are thinking about developing this type of currency. For example, Europe is considering proposing a “digital euro” and is expected to take a decision in mid-2021. The trend is the same across the Channel, with the United States increasingly talking about an e-dollar as a reaction to the digital Yuan.
E-money is seen as a response to private cryptomoney. Faced with the growing success of cryptos, countries are worried about their sovereignty. Indeed, in essence, cryptos are based on a completely decentralized international system that sidelines national central banks. By offering their own dematerialized currency, countries also want to ensure a better level of security for their citizens. In this hypothesis, it would thus be envisaged that citizens would be able to deposit their digital money directly with the central bank. In other words, the risks of hacking into individual wallets would be greatly reduced.
Finally, digital money would make it possible to compensate for the use of cash. Already in decline over the years, the disenchantment has increased considerably with the COVID-19 pandemic. Without completely replacing cash, e-money could be a addition.