Cyber yuan: China rolls out its own e-currency, a first for major economy
With cyber yuan, the Chinese government has created a digital currency controlled by its central bank.
With credit cards and payment apps, money dealings are already sort of virtual. But now, China is turning legal tender itself into computer code, The Wall Street Journal (WSJ) reported.
China’s version of a digital currency is controlled by its central bank, which will issue the new electronic money. It is expected to give China’s government vast new tools to monitor both its economy and its people.
By design, the digital yuan will negate one of bitcoin’s major draws: anonymity for the user, it added.
Central banks across the world, including the People’s Bank of China (PBOC), are looking at developing digital currencies that could play a role in making domestic and international payments faster and cheaper for both large-scale and consumer transactions.
A cyber yuan stands to give Beijing power to track spending in real time, plus money that isn’t linked to the dollar-dominated global financial system.
A thousand years ago, when money meant coins, China invented paper currency. Now the Chinese government is minting cash digitally, in a re-imagination of money that could shake a pillar of American power.
It might seem money is already virtual, as credit cards and payment apps such as Apple Pay in the US and WeChat in China eliminate the need for bills or coins. But those are just ways to move money electronically. China is turning legal tender itself into computer code.
Cryptocurrencies such as bitcoin have foreshadowed a potential digital future for money, though they exist outside the traditional global financial system and aren’t legal tender like cash issued by governments.
China has a long-standing aim of internationalising its currency, and in time, the digital yuan may help with this initiative, making it easier to encourage users in other countries to use the yuan.
Source: Business Standard