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The digital yuan introduction is seen as a silent way for the Chinese government to make a huge move in accordance with the global market need and also a way to control the fast-growing ‘uncontrolled’ crypto industry.
Through an opinionated blog post by Fan Yifei, a deputy governor of the People’s Bank of China (PBoC), highlighted some of the final expected touches to see a digital yuan come true successfully.
Since the bank announced on October 31, 2019, the plans to implement digital yuan years, there have been a lot of reactions both at the national level and in the global sphere. Digital yuan is capable of both delivering a smooth post corona transition and also instigating the ongoing U.S.-China trade war.
With the increased demand of the cryptocurrencies at the global market, most governments are rushing to implement and metamorphosize fast through the current phase to keep up with the changing economy.
The digital Yuan introduction is seen as a silent way for the Chinese government to make a huge move in accordance with the global market need and also a way to control the fast-growing ‘uncontrolled’ crypto industry.
Either of the above, China is still being considered to be leading the global market in implementing digital currency supported by the central banks.
Other countries are closely following China’s footsteps and hoping to keep up with the pace.
Digital Yuan Future According to Fan Yefei
In the blog post, Yifei outlined the major regulatory principles for the operation of the digital yuan.
“Based on the broad account system, it supports the loose coupling function of bank accounts, which is equivalent to banknotes and coins, has value characteristics and legal compensation, and supports controllable anonymity. We believe that digital renminbi is mainly positioned in cash in circulation, and this positioning contains rich theoretical connotations and policy choices,” he stated.
According to the post, China will slowly introduce digital Yuan in accordance with the market needs. Recently, the government announced that all the civil servants will receive salaries in digital yuan.
In addition, with the increased digital transactions in China, digital yuan is to be considered a legal tendering unit.
The deputy governor went on to say that according to the renminbi’s indemnity provisions, the digital renminbi could be used to pay “all public and private debts within the territory of our country.”
This is seen as a huge competition to the United States dollar that has largely dominated the world reserve currency.
However, with the United States rushing to embrace its own mega projects including Ripple’s XRP, by allowing banks to operate through blockchain technology using cryptocurrencies, the overall competition in world reserve currency is set to heighten in the near future.
Notably, Fan also highlighted that the digital renminbi must comply with laws and regulations on cash management, including Anti-Money Laundering and combatting terrorist financing.