The Chinese central bank said Monday that the country needs to become the first to issue a digital currency to reduce its dependence on the global dollar payment system, according to a local report cited by Reuters.
According to Reuters , the banks are involved in large-scale internal testing of the app for China’s planned digital currency electronic payment or DCEP. The trial has seen staffs of these local banks in different cities use the digital wallet app for making payments and transferring funds.
As reported back in April, the Agricultural Bank of China (ABC) launched a mobile application for the trial of the CBDC project. The testing was said to be conducted by whitelisted citizens in four cities including Shenzhen, Xiong’An, Chengdu, and Suzhou. Other companies such as Starbucks, McDonald’s, Didi, and Meituan Dianping are participating in the DCEP trial.
The latest testing of China’s CBDC reflects the country’s progressive digital yuan efforts. While the CBDC bandwagon continues to see more entrants, the People’s Bank of China (PBoC) maintains the lead.
Earlier reports revealed that China was looking to accelerate its CBDC plans because of the economic friction between the country and the United States. Another reason was to make the national digital currency available for the COVID-19 stimulus payment.
Also, Beijing reportedly has plans to push its CBDC for cross-border transactions. The increased use of the yuan for international settlements could challenge the U.S. dollar hegemony.
China’s Digital Currency Push
An article distributed in China Finance, a magazine run by the People’s Bank of China (PBOC), said the rights to issue and control digital cash would turn into “another war zone” of rivalry between sovereign nations.
Issuance and flow of the advanced money would carry extraordinary changes to the existing global fund, it said.
“China has numerous favorable circumstances and openings in giving fiat computerized monetary forms, so it ought to quicken the movement to hold onto the principal track,” the report noted.
Nearby media a month ago detailed a portion of China’s most important state-run business banks have just begun directing enormous scope inner testing of an advanced wallet, drawing a stage nearer to the official dispatch of the local computerized cash.
The China Finance article contended that improved information criticism from digital currencies and digital money would help upgrade financial strategy transmission, which upholds monetary recuperation in the post-pandemic period.
Chinese CBDC can Grapple US Dollar
China likewise needs to build up another installment framework organization to break the dollar syndication as a key aspect of the yuan internationalization, the article said.
It included that a PBOC digital currency research unit has documented 130 patent applications identified with digital money extending from issuance, dissemination to the application as of end-April. Those capacities would shape a total flexibly chain to help the dispatch of digital currencies and cashless methods of money transfer.
In April, the PBOC’s digital money establishment disclosed to Reuters it was leading interior preliminaries of an advanced cash electronic installment framework in four urban communities and that is expected to steer the framework at future Winter Olympics settings.
The PBOC set up the examination group six years prior to investigating the chance of dispatching digital cash to reduce the expense of circling paper cash and lift policymakers’ control of the cash gracefully.
As reported earlier by Chinese banks are already involved in large-scale internal testing of the app for China’s planned digital currency electronic payment or DCEP. The trial has seen staffs of these local banks in different cities use the digital wallet app for making payments and transferring funds.