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China starts digital yuan pilot trial on app stores

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China has released pilot versions of its digital yuan wallet application on both iOS and Android app stores. Meanwhile, the central bank takes it a notch higher by developing its digital currency. The local media, BlockBeats China took to Twitter to announce the launch.

The ‘e-CYN” app (pilot version), which was developed by the People’s Bank of China’s (PBOC) digital currency research institute, was available to download on the Chinese Android and iOS app stores, on Tuesday in Shanghai.

PBOC governor, Yi Gang had said in November 2021, that, the country opts to continue to advance the development of its Central Bank Digital Currency (CBDC) and enhance its design, usage, and interoperability with existing payment tools.

However, to download the trial app and activate the wallet, it is a requisite for users to reside in one of these 11 places in China: Shenzhen, Suzhou, Xiong’an, Chengdu, Shanghai, Hainan, Changsha, Xi’an, Qingdao, Dalian, and the Winter Olympics area.

An early start for yuan wallet’s CBDC in China

While countries all over the world are still at the stage of investigation of Digital currency technology, The Chinese have embraced an ahead of time pilot through CBDC for public use.

The PBOC had been at it, racing ahead with its own CBDC project, rolling out a virtual version of the yuan in trials across many provinces, for a while now. Many experts have said that the PBOC is likely to be the first to fully launch a CBDC.

What China’s CBDC could mean for the world

China is one of the very few countries that favor technology becoming far more important than money. By issuing a digital yuan, the country isn’t looking to dismount the U.S. dollars as the reserve currency, according to experts. In addition to rolling out the digital yuan in domestic pilots, the Chinese have made use of the digital yuan as a condition in the Regional Comprehensive Economic Partnership, as a successor to the Trans-Pacific Partnership that includes China and not the U.S. More importantly, it is accelerating a reality first broached by cryptocurrency that with the right technology, own money can be created and the rails to move it.

To issue CBDC, Japan must speed things up, says Minister

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To counter China’s central bank digital currency or CBDC, Japan’s new administration has urged its financial bureaucrats to ramp up efforts towards issuing its own digital yen. A minister of the newly created portfolio of Economic security, Takayuki Kobayashi has stressed to speed up the process in issuing CBDC and went on to term the matter to be a ”national security” level.

While the political efforts have been limited to rhetoric, the Central Bank of Japan [BOJ] is already facing the heat due to its “cautious, baby-step approach” toward issuing the digital yen. As a global front-runner, China has already run a few tests for a possible launch of a digital yuan by 2022.

In contrast to that, BOJ has only kickstarted the first phase of its experiment in April and clarified that it has no immediate plans to issue a CBDC. Besides it categorically said that ‘pilot programs, if any, won’t take place until 2023 at the earliest.’ Now that lackluster stance might see its end as Prime Minister Fumio Kishida has shown serious interest in issues concerning CBDC.

Japan’s CBDC- The journey ahead

Officials at BOJ reassured that China’s plan won’t directly impact the deadline for their CBDC experiments as the main aim of issuing a digital yen is to provide secured, efficient payment and settlement means to the citizens. Sources familiar with the issue, however, sound skeptical and wondered how quickly the Central bank can match up with its European and U.S. counterparts to announce plans for issuing the digital currency.

That being said, the debate over issuing a digital yen might escalate next year as Kishida’s administration lays out plans detailing its economic security roadmap against the backdrop of China’s recent promotion of its digital yuan at the Beijing Winter Olympic Games in February.

A former BOJ board member Takahide Kiuchi said,

It’s clear Kishida’s administration and his ruling party are keen on issuing a digital yen. If China launches a digital yuan next year and Europe’s central bank announces plans to issue a digital euro, that will have a huge impact on Japan and pile pressure on the BOJ.

Tanzania preps to roll out its very own CBDC

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The Bank of Tanzania did not want to be left behind in the central bank digital currency [CBDC] game. Therefore, the African country revealed that it was prepping for the launch of its native digital currency.

The digital bug hasn’t spared anyone. While digitalization has taken over the entire globe, Tanzania decided to jump onto this bandwagon. Countries like China have dispensed immense progress with regards to CBDCs. With several countries just beginning the whole research and development process, China was several steps ahead as the citizens of the country have already started using the digital yuan.

Looks like Tanzania was following the footsteps of China. The Governor of the Bank of Tanzania, Florens Luoga revealed that the country had already commenced preparations for the launch of its very own CBDC.

Tanzania next in line to launch CBDC?

As per Bloomberg, the Governor of the bank, Florens Luoga noted that the country did not want to be left behind while the globe undergoes a digital metamorphosis. Speaking at a finance conference, he added,

“To ensure that our country is not left behind the adoption of central bank digital currencies, the Bank of Tanzania has already begun preparations to have its own CBDC.”

In addition to this, the central bank Governor affirmed that the government would extend the research and development surrounding CBDC. This would include the increase in the team capacity as well.

Africa has been going big on digitalization. Move over Tanzania, Nigeria already rolled out its CBDC, eNaira back in October itself.

Despite its ever-growing interest in CBDC and other digital assets, several African countries like Tanzania itself remain wary of cryptocurrencies. However, earlier this year, IOHK went to the region to develop a brand new mobile network.

Crypto firms were seen venturing into several African regions to educate them about blockchain tech as well as cryptocurrencies. The motive behind this is to not deprive them of the digital revolution that is underway.

European Central Bank official Fabio Panetta comments on the digital euro

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The Digital euro has been in talks for months, and recently, the European Central Bank executive Fabio Panetta commented on the creation and development of a central bank digital currency (CBDC) in Europe. Panetta claims that the digital euro’s success is a must, but it should not be so successful and popular that it puts the current monetary system in Europe at risk.

While a number of people in the country are actively investing in cryptocurrencies, the continent hasn’t released any special law regarding cryptocurrencies. Panetta is a senior-ranked official at the European Central Bank who claims that the cash is being undervalued to the increase in popularity of digital payments, especially after the Covid-19 crisis.

Although a number of nations have come up with their digital currencies and even the United Kingdom is looking to launch its own CBDC, there is no confirmation regarding a digital euro as of now.

European Central Bank to limit digital euro’s success?

The member of the Executive Board of the European Central Bank, Fabio Panetta, claims that the popularity of digital payments might make the digital euro more attractive to the citizens of the continent. However, Panetta also noted that the design of the digital euro should prevent it from becoming “so successful as a store of value that it crowds out private money and increases the risk of bank runs.”

In a speech at the Elcano Royal Institute in Madrid, Panetta provides new insight into the plans of the European Central Bank for the release of a CBDC.

“The ECB and the European Commission are together reviewing at the technical level a broad range of policy, legal, and design questions emerging from a possible introduction of a digital euro, including the role that legal tender status might play in achieving the desired network effects.”

Fabio Panetta in his speech

However, Panetta also noted that the digital euro must be accessible to all the citizens and very easy to store and make payments. It should be attractive to the users as well, supporting Europe’s autonomy in global payments. The bank seems to have planned a number of policies regarding the digital euro.

Nigeria set to launch CBDC on 25th October

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In a report presented by Bloomberg, the government of Nigeria has decided to launch its CBDC on 25th October Monday. The CBDC, dubbed as eNaria, is not there to replace the physical currency of Nigeria but is there to compliment it.

According to the report, the eNaira will “make financial transactions easier and seamless for every strata of the society.” This means that the goal is not to defeat the existing currency system but rather to integrate the digital currency into the existing system.

Nigeria will be one of the pioneering countries to actually integrate CBDC in the financial structure of the nation. The launch of eNaira was expected to take place on the 61st independence day of the nation, between 1st and 4th October. However, the launched was delayed.

Nigeria Central Bank (CBN) to release wallet too

In their statement, the country’s regulatory authority said that with the eNaira, the bank would also release a wallet that can be integrated into the individual bank account of a person. This will make the transfers of funds way easier and trustworthy for the people.

The wallet sanctioned by the CBN can also be used through the prepay option, making the payment structure way easier for a person, allowing them to pay as they go. It seems that the government has planned to release the three-tier consumer “speed wallet” for both the unbanked and the banked.

For the people with no bank accounts, the limit for each transaction will be set at ₦50,000 ($100) while they can own ₦300,000 ($600) altogether in the wallet. However, the customers with bank accounts will have the privilege of owning higher amounts in the bank, and transfer limits will be set higher.

The Central Bank of Nigeria has formed an alliance with Fintech company Bitt Inc., as the Technical Partner, enabling the firm to use its technical prowess for better integration of the eNaira.

China urges McDonald’s to embrace digital yuan before the Winter Olympics

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China has been at the forefront of the central bank digital currency aka the CBDC game. While the world traverses into the digital world, governments from all across the globe were seen expressing immense interest in CBDCs. However, China stayed ahead of everyone through fast-paced developments. Now, with just months left for the Winter Olympics which is scheduled to take place in Beijing, the Chinese government was seen urging prominent fast-food chain, McDonald’s to accept the digital yuan.

The world seemingly liked the idea of cryptocurrencies. However, the industry’s decentralized nature and volatility appalled many. While taking out leaves from the crypto book, governments wanted to uphold supervision. Therefore, they decided to roll out CBDCs.

As several have just started to get on to the CBDC bandwagon, China was well ahead in the game. The country was rather quick to wrap up its testing phase and had already made the digital yuan available to the public. While prominent firms across the country were planning on incorporating the digital yuan into their system at their own pace, the Chinese government was reportedly coercing them to accept the CBDC.

China trying too hard to embrace its CBDC?

As per a recent report by the Financial Times, the Chinese government wanted McDonald’s to include the digital yuan into its payment system. The government required the fast-food giant to allow citizens to pay with the CBDC across all the outlets in the country.

Apart from McDonald’s, popular firms like Nike as well as Visa were pressured into accepting the digital yuan, the report suggested. Furthermore, this pressure was derived from the upcoming Winter Olympics, which is slated to take place in February.

The fervor around this currency was relatively high. However, the backlash it amassed overpowered everything. Several even suggested that the Chinese CBDC could rob the citizens of financial freedom as the digital yuan was mostly a tool of surveillance.

Alex Gladstein, chief strategy officer at the Human Rights Foundation commented about the same and said,

“The end of cash and the insta-analysis of financial transactions enable surveillance, state control, and, eventually, social engineering on a scale never thought possible.”

Japan intends to uphold simplicity in CBDC design

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While governments across the entire globe have been prepping to roll out CBDCs that entail multiple features, Japan intends to keep it simple with the digital yen. An executive from the Bank of Japan noted that simplicity would be a primary feature of the Japanese central bank-issued digital currency.

The fervor around central bank digital currencies [CBDC] hit the roof after China made fast-paced development in the same. While the Asian country was testing out the digital yuan, an array of countries had just started to discuss the prospects of including CBDCs into their system. Nevertheless, numerous countries took charge and have started developing their native CBDC.

Japan is still researching the prospects of the digital yen. However, the central bank of the country seemed to be well aware of what people need. During a recent speech, an executive of the Japanese central bank, Shinichi Uchida revealed the whereabouts of the digital yen.

Japan to keep it “simple” with the digital yen

Since certain payment channels have existed for a long time now, introducing a new one could most likely disrupt the extant situation. Therefore, before rolling out a CBDC, governments have been profoundly working on co-existence. Keeping the same in mind, Uchida suggested that the Japanese CBDC would have a simple design as it requires to be integrated into the private sector payment models.

The executive further added,

“To achieve vertical coexistence, a relatively simple central bank digital currency (CBDC) design is desirable for the private sector to use it as an ingredient.”

The bank intends to move over to the second phase of experiments of the CBDC only in April 2022. During this phase, the bank would be testing out the major features of the coin.

While the central bank of the country still has no plans of rolling out a CBDC anytime soon, Uchida revealed that the bank was in discussions with the private sector. The bank intends to hear out an array of people and their views about introducing the digital yuan. Hence, the bank engaged with the private sector and exchanged views about the imminent Japanese CBDC.

CBDCs are savings annihilator in disguise alleges Edward Snowden

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Former intelligence expert Edward Snowden recently launched a scathing attack on CBDC and expressed apprehension about its proposed use cases in a blog post titled, ‘Your Money AND Your Life- Central Banks Digital Currencies Will Ransom Our Future,’. According to him, Central Bank Digital Currency, or CBDC as it is more commonly known, is a policy instrument designed to systematically eliminate every wage earner’s savings resources and induce deliberate spending in the economy. He stated,

What is a Central Bank Digital Currency, you ask? Oh, you know: just a “useful policy tool” for casually annihilating the savings of every wage-worker in the country if they don’t spend them fast enough.

Is CBDC a cryptofascist currency?

CBDCs are in general, digital replicas of fiat currencies backed by region-specific governments and modern banking systems. It is noteworthy to mention that the introduction of Facebook-owned stablecoin Diem [previously Libra] back in 2019 acted as a catalyst that triggered a global race to build a virtual currency pegged to their respective fiat currencies. That suddenly changed when the COVID pandemic paralyzed major economies around the world and brought a disruption to the traditional economy and that is how it propel the renewed interest in CBDC.

Even though governments and central banks around the world are banking on CBDCs and touting them as a contender to cryptocurrencies, privacy advocates like Edward Snowden expressed fear that these digital currencies might act as exploiting tools. He went on to further deem CBDC to be a ‘perversion of cryptocurrency,’ terming its core principles and protocols as a cryptofascist currency, meticulously designed to deny the basic ownership rights of an individual’s assets by positioning the state as the caretaker for every transaction.

CBDC developments in recent times

Many countries have started working on their respective central bank digital currencies. However, China is leading much ahead among major economies and has launched its first whitepaper on the digital Yuan this year, and is currently exploring the possibility of integrating into a blockchain as its core CBDC is centralized.

Countries such as Nigeria have already rolled out their own CBDC called e-Naira on a pilot basis this month. The project is significant amid negative crypto sentiments among state officials. Surprisingly Nigeria is among the top tech enthusiasts African country with more than 30% of its citizens owning cryptocurrencies.

While the United States is still lagging in this global race, countries such as Bahamas and Sweden with their very own ‘Sand Dollar’, and ‘e-krona’ respectively pioneering the frontier.

BIS Report outlines CBDC benefits as joint initiative evolves to Phase 3

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Central Bank Digital Currencies or CBDCs have been gradually gaining traction. While some countries are at a later stage in terms of piloting, others seem to have lagged in the global race.

The US, for one, has been struggling with its e-dollar exploration. Nevertheless, entities such as BIS and IMF have continued to advocate for the CBDC rollout in response to the growing popularity of stablecoins and have also backed several collaborative initiatives of the same.

In the latest development, the Bank for International Settlements [BIS] outlined a prominent use case after reviewing a prototype being jointly developed by the central banks of China, the United Arab Emirates, Thailand, and the Hong Kong Monetary Authority.

CBDC Speed and Cost benefits

Titled ‘Inthanon-LionRock to mBridge,’ the report by the Switzerland-based financial institution stated that blockchain-powered CBDCs can potentially minimize cross-border payments’ transaction throughput from multiple days to just a few seconds. According to BIS, the aforementioned prototype shows a tangible improvement not just in terms of cross-border transfer speed but also substantially reduces numerous of the core cost components of correspondent banking. It further stated,

BIS stated that the prototype essentially displayed the potential of faster and lower-cost cross-border transfers for participating jurisdictions. It also went on to add that it can be beneficial for jurisdictions that do not necessarily have strong correspondent banking relationships.

BIS revealed the project evolving into Phase 3 which involves additional experimentation with respect to design choices, technology trade-offs, and defining a future direction from prototype to an open-source, production-ready system.

This isn’t the only joint initiative. As a matter of fact, the central banks of Australia, Singapore, Malaysia, and South Africa unveiled a joint initiative to trial international settlements with the help of CBDC earlier this month. Called ‘Project Dunbar,’ the initiative is expected to prototype shared platforms thus facilitating direct transfers between institutions using digital currencies issued by multiple central banks.

Dunbar is slated to be conducted in partnership with the Bank for International Settlements Innovation Hub from its Singapore Center. Similar to mBridge the initiative will also be based on a DLT-enabled infrastructure to “lay the foundation for global payments connectivity.”.

India could kick-start its CBDC pilot by the end of 2021

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As the world has been going digital, India seemed to be jumping on to this train. India’s central bank official revealed that the country was working towards a central bank digital currency [CBDC].

The world has been moving towards digitalization. The need to go digital spruced up following the emergence of the deadly COVID-19 virus that caused immense destruction. Even though the concept of CBDC existed during pre-COVID times, the need for it grew during and after the pandemic. China’s fast-paced development of the digital yuan further pushed governments across the globe to dive into the CBDC game.

Certainly, India did not want to fall back. The country was previously extremely hostile towards crypto, however, with time the government decided to fully learn about the space and then lay out regulations. Moving over to CBDCs, the governor of the Reserve Bank of India, Shaktikanta Das noted that India was making progress with regards to the development of a CBDC.

India’s central bank governor reveals CBDC trial phase date

In an interview with CNBC, RBI governor Shaktikanta Das suggested that the bank would roll out its first CBDC trial by December of this year. He added,

“We are being extremely careful about it because it’s completely a new product, not just for RBI, but globally. […] I think by the end of the year, we should be able to — we would be in a position, perhaps — to start our first trials.”

Furthermore, speaking about the Indian rupee, the governor noted that the central bank was looking into the impact of the digital asset on the country’s financial sector. In order to do so, the bank is reportedly inspecting an array of aspects of the asset to figure out its influence on the monetary policy and the existing currency.

The country’s recent interest in the development of a CBDC could pose beneficial as it would put itself in the ongoing CBDC race.