The rise of digital currency is not a new idea; however, it is relatively new in China. China has been exploring digital currencies since 2014. The country has yet to launch a digital yuan, which would be under the authority of the People’s Bank of China. The government also maintains a blanket ban on trading cryptocurrencies, which it views as a source of financial risk.

While its development and adoption may be a long way off, Beijing has strong reasons for pushing forward with e-CNY. The Chinese Communist Party’s fourteenth five-year plan calls for the country to increase its research and development of digital currencies. Moreover, the Chinese government’s appetite for surveillance is the driving force behind this move.

The e-CNY project has generated a lot of positive buzz, largely because China is considered to be one of the most innovative nations. This initiative may be a precedent for other major nations, and it’s possible that the US and EU will follow China’s lead. Moreover, the country’s crackdown on the digital giants has drawn comparisons with the recent US government crackdown on tech giants.

The PBOC’s Digital Currency Research Institute is spearheading the research. Tencent’s platforms allow end users to make payments with their existing forms of money, or with central bank reserves. The PBOC mandates the use of central bank reserves to back up e-CNY e-wallet balances.

The rise of China’s digital currency is a big concern for Western governments. As the Chinese government attempts to increase its influence in the world’s financial system, e-CNY could be used as a vector for global surveillance. In the meantime, the United Kingdom spy chief has raised concern over the use of the e-CNY by foreign governments. And Senator Pat Toomey has written to the Biden administration to warn them of the risks of ceding the first mover advantage to China. The Chinese ministry of foreign affairs responded by castigating U.S. lawmakers for making trouble for the e-CNY project.

The PBoC’s stated goal is to create a widely-accepted, digital payment system in China. The e-CNY is expected to widen access to financial services and promote fair growth in the country. However, the current scope of e-CNY is very limited.

While e-CNY is not yet fully functional, it was launched in China’s app stores ahead of the 2022 Winter Olympics in Beijing. It briefly topped Apple’s China App Store charts. It is only available in 10 cities, as part of an initial pilot launch. The e-CNY is a lower-cost alternative to WeChat Pay.

It’s worth noting that e-CNY wallets are independent of the Alibaba and Tencent ecosystems. This makes them more robust against disruption. If Tencent and Alibaba get out of business, consumers can settle their e-CNY payments using an alternative payment system. This would also encourage more competition and give the public an alternative to these two popular options.

Leave a Reply

Your email address will not be published. Required fields are marked *