Benjamin Godfrey is a blockchain enthusiast and journalists who relish writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desires to educate people about cryptocurrencies inspires his contributions to renowned blockchain based media and sites. Benjamin Godfrey is a lover of sports and agriculture.
China is set to expand its digital yuan testing to Beijing, Tianjin, and other acclaimed prosperous provinces in the country. No timeline has been set for this move.
According to the Wall Street Journal report released on August 14, Asian economic and tech giant China will be extending its Proof of Concept (PoC) for its proposed digital yuan to some of the most prosperous provinces in the country.
The plans made known by China’s Commerce Ministry will see the government expand its pilot testing program of the digital yuan to Beijing, and nearby Tianjin and Hebei province in the north; the Yangtze River Delta to the South; and, along China’s wealthy Southern coast, Guangdong province and the neighboring cities of Hong Kong and Macau.
According to the ministry, the less prosperous provinces with the prerequisite requirements will also develop a model to conduct the trials for the digital yuan in the coming days. Of the countries developing a Central Bank Digital Currency (CBDC), China is arguably ahead of the pack as the CBDC project entered its testing phases earlier in the year. These testing programs are being led by the People’s Bank of China
The Pilot projects were launched earlier in the year in Shenzhen, Xiongan, Chengdu, and Suzhou, where the DCEP is being incorporated into such use cases including transportation, education, healthcare, and other consumer goods and services. The transportation use case is been carried out in partnership with China’s Uber Didi while Meituan Dianping is helping the PBoC to test the DCEP using its food delivery system.
China and Its Digital Yuan (DCEP)
China’s plans to digitize its fiat currency (yuan) is commonly known as the Digital Currency Electronic Payment System (DCEP). Intended to usher in a new era of a digitized economy in the face of advancing blockchain/distributed ledger technology.
China did not give cryptocurrencies very swift backing in the early stages, a position that changed with the right regulations put in place. The Chinese government’s relationship with the crypto sphere at the early stages was rightly captured by Edith Yeung, head of 500 Startups as a “love-hate relationship.”
Yeung also said in an interview with CNBC at East Tech West that the Chinese government is investing in blockchain projects but decidedly averse to the financial aspects of cryptocurrencies. The Chinese government made its long term plans to overhaul the digital payment ecosystem when it announced it will be launching its own digital currency whose development has been in progress since 2018. The government hopes this move will help strengthen the Yuan both locally and internationally.
To make the DCEP function more like cash, the PBoC invented a system called “loosely coupled account links.” In traditional electronic payment systems, a transaction can only happen between two banking accounts; in the DECP system, transactions can happen between two DCEP wallets, despite neither being associated with a bank account. This direct transaction functions like cash because it removes financial intermediaries such as banks and fintech giants from the transaction.
China’s Digital Yuan (DCEP) is a novel project which will undoubtedly bolster China’s already cashless economy has drawn a lot of preparations on the part of the government. With numerous blockchain research centers springing up around the country since the project was revealed in 2016, a flexible transition into a blockchain-powered economy has been ongoing. This claim can be substantiated with reports that over 10,000 blockchain companies were established in the first half of 2020.