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China Tests Native Digital Currency in Multi-Transfer Country Wide Tests

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The world of cryptocurrencies has taken multiple phase changes over the past few years with the last couple of years seeing a pick-up from traditional departments. One of the most popular innovations in the space was the concept of centrally backed cryptocurrencies.

State-backed digital currencies are not a new idea as countries like Venezuela have been dabbling in the field for quite some time now. Steps taken by China to create its own digital currency have elevated the industry to new heights, with the Red Dragon making rapid progress on the back of new developments.

China’s digital renminbi took the world by storm when it was first revealed by the People Bank of China. The entire cryptocurrency market received a boost when Xi Jinping endorsed the concept of blockchains and the future of digital payments. According to new reports, China has kept its promise of delivering a seamless payment system after conducting multiple large-transfer tests.

Yi Gang, the governor of the People’s Bank of China recently stated that more than 2 billion yuan [approx. $300 million] was spent using the country’s digital currency. The large sum was transferred in 4 million sperate transactions, a feat worth mentioning. The country has placed its bet on the speed of blockchain networks as China also has plans to replace physical cash with virtual currencies.

Officials close to the developments touched on how the digital currency will work. The country has ingrained its statehood in the CBDC as the currency will be first issued by the People’s Bank after which private companies and corporates can make use of it. Speaking at Hong Kong’s Fintech Week, Yi stated that the 2 billion yuan was spent in four cities via 12,000 payment scenarios. In a previous test, the Chinese city of Shenzen saw its citizens using state-provided CBDCs.

The PBoC governor admitted that the banking infrastructure expected the dawn of cryptocurrencies to arrive soon. This is a marked shift from earlier years when anything other than fiat currencies was considered a bane to all financial environments.

Chinese Central Bank Seeks Public Advice In Amending Banking Law For Its CBDC

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Yet again, China has made it clear to the world that the central bank’s digital currency has been winning in its development and issuance. China seems to be well ahead of the CBDC game, though being first in the game has its own perks. The Asian country’s latest news revealed that progress has been made in the digital yuan regulatory sector.

Digital Yuan, Not Yuan-Pegged Tokens

A recent notice issued by the People’s Bank of China, the central bank of the world’s most populous country affirmed that the bank and the government were inclined towards regulating the digital yuan and banning yuan-pegged digital assets. Through the notice, the Chinese central bank sought feedback from the public to make amends to the existing central banking law. The bank urged people to send in their feedback for the alteration of the draft before 23 November 2020.

China’s CBDC development turned several heads. With some lauding the country’s pace in the development of the digital yuan, a few others alerted the Chinese citizens that this asset would take away financial privacy. However, the country seems to be emphasizing outlawing yuan-pegged assets.

The law put forth with regard to digital assets suggests that the Renminbi encompassed both a physical as well as a digital form. Section 3 under article 22 in the revision draft proposed that any legal entity or an individual was prohibited to sell or issue tokens that impacted or replaced the circulation of the Renminbi. The revised draft further read,

“For anyone that violates such regulation, the PBoC will halt such activities and forfeit any proceed from the making and selling of yuan-backed digital tokens and issue a fine that is up to five times of the involved proceeds.”

The latest news proves that digital yuan would soon be a part of the global financial scene. However, the fact that the country is steering towards outlawing yuan-pegged stablecoins could be a major drawback for the several platforms that the country currently harbors.

DCEP: China’s Biggest Food Delivery App to Trial Digital Yuan

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People’s Bank of China (PBoC) is planning to trial its digital yuan with food delivery giants backed by Tencent Holdings Ltd. According to a report published by Bloomberg on 15 July, the PBoC is set to boost its National Digital Currency Electronic Payment (DCEP) adoption by testing it on Meituan Dianping-controlled platforms, including Tencent’s food delivery application.

Digital yuan adoption

PBoC is currently testing its central bank’s digital currency in four Chinese cities and is closing its doors to the public. Meituan has been involved in a dialog with China’s Central Bank ‘s research arm on digital legal tender applications in the real world, based on sources that are close to the matter.

Indeed Meituan is now joining the Chinese ride-sharing startup Didi Chuxing, which has recently joined the trial program for researching digital yuan applications. Like Didi, Meituan is involved in billions of dollars of transactions every day in its food delivery business and online travel solutions. Its inclusion in the testing phase would certainly boost the mass adoption of state-issued digital currencies.

China to make history as the first country to issue a CBDC?

According to the Blomberg report, the PBoC is deliberating with Bilibili Inc, another online video streaming service supported by Tencent. The two companies that provide a range of online services in the form of food delivery to e-commerce; seem to be the perfect prospects to help DCEP win its share of China’s $27 trillion payment industry. In addition, digital yuan could sustain the government’s grasp of the world’s second-largest economy.

For about six years now, China’s central bank has been working on the digital yuan, and it’s closer than ever to make use of that to the public. Several other central banks are also testing and researching CBDCs around the world. In conclusion, it is assumed that the Facebook Libra project is the chief catalyst to why central banks worldwide have intensified their efforts to develop a state-issued digital currency.

Didi Chuxing ,Conducting The First Real World Trial of Digital Yuan

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Didi Chuxing-what many consider China’s  Uber to be conducting a test on the digital Yuan. As per Wednesday’s announcement, Didi joined the list of companies and banks to test China’s digital yuan developed by the People’s Bank of China (PBOC). The new electronic exchange medium will be known as the Digital Currency Electronic Payment (DCEP).
The ride-sharing giant features at least 550 million users and appears to be an appropriate platform to test the China’s digital yuan as a form of digital cash payment. This comes just a few days ahead of an expert analysis citing that the China’s Digital Yuan was only here to compete with the US dollar, not Bitcoin.

China Digital Renminbi, The First Mover of Stablecoin Space

Apparently, the cryptocurrency community has been monitoring the central bank’s digital payment system since China announced the development of a stablecoin.

Researchers at the Bank of America,  have stated that China is the first mover in the CBDC area; and have recognized the digital renminbi as a welcome asset for regional trading partners. This, the analysts claim, is on the belief that payments are becoming more electronic and cashless. Thus, making the China’s  a candidate that would most likely disrupt the US dollar.

Nevertheless, ahead of the first real-world trial of the China’s digital yuan, the Chinese Central Bank had initially launched mini-trials across four Chinese cities. The tests were carried out through various partnerships between the Central Bank, Starbucks, McDonald’s and Subway. These tests were the first phase of the trial, and the nation is now preparing to enter the next phase.

According to the People’s Bank of China Strategy and the timeline for the DCEP (Digital Currency Electronic Payment), Didi Chuxing and the Central Bank Task Force will be strategizing, designing and piloting the payment system with strict safety, governance, regulation and security precautions.

However, PBoC focuses on testing the digital stable coin as a native token on the Ride-Sharing application. It seems that the successful DiDi real-world test will lead to the final launch of the DCEP system. In fact, an official at the People’s Bank of China suggested plans to have a China’s digital yuan in use during the Beijing Olympics in 2022.

Singapore Central Bank Confirms its Readiness to Explore Digital Currency

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Singapore’s central bank is looking to join forces with the People’s Bank of China (PBoC) to explore Central Bank Digital Currencies, according to Ravi Menon, Managing Director of the Singapore Monetary Authority (MAS).

During a finance conference in Shanghai, Menon stated the new plan. He outlined the progress China has made in creating its own CBDC, and said Singapore was looking to share information and experience in this field with China. Singapore is conscientiously looking to build a central bank digital currency.

Menon stated the new plan during a financial conference in Shanghai. Additionally, he outlined China’s digital Yuan development progress. Singapore is conscientiously looking to build a cryptocurrency central bank and is looking forward to exchanging skills and expertise with China, as reported by Sina Finance on 18 June.

Singapore exploring Central Bank Digital Currency

Menon allegedly stated that the state-issued cryptocurrencies were a hot topic, outlining that Singapore and China are deliberating on various CBDC development scenarios.  He also noted that the reasons for developing a Digital Currency Central Bank differ on a country-by-country basis.

However, he stated that Singapore ‘s reason for developing a CBDC is to cut the cost of cross-border payments and settlements, protect transactions through blockchain, and reduce payment processing time.

Facebook Libra project challenge to central banks

Menon also mentioned that the embattled Facebook Libra stablecoinn is facing and said that Libra is a major challenge to the global central bank system. He also asserted that the Libra stablecoin has “great flexibility” and that the team behind its development is committed to working closely with international regulators.

The Singapore Monetary Authority has been developing its interbank blockchain-based payment system since 2016. The Ubin Project, which was officially launched in 2018, is a partnership to explore the application of blockchain technology to clear and settle payments and securities.

China’s plan to counter Facebook Libra project and USD

Back in June 2019, PBoC was in a rush to launch its CBDC ahead of Facebook Libra’s stablecoin. Although the digital yuan is undergoing pilot tests in various Chinese cities, experts suggest that China might deploy it with the public, not noticing the change. Furthermore, early in June, reports broke out that China is planning to develop an East Asia digital currency to reduce the over-reliance in the United States dollar. 

People’s Bank of China (PBoC) Almost Complete Sovereign Digital Currency

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Amidst the COVID-19 adverse effect across China and the world at large, there seem no setbacks in the development of China’s digital yuan.

As per the report shared by a Global Times on Tuesday, the People’s Bank of China (PBoC) is way closer to issuing digital yuan. The report was cited with the “industry insiders”, adding to that the central bank is also drafting relevant laws to roll out its national digital currency.

The news comes in a wake of China’s anti-crypto, elaborating three types of scams happening across crypto exchanges. In addition to this, the bank had also noted the crowning cryptocurrency, Bitcoin is not a safe haven and it is too volatile.
On the other side, the recent report also noted that the country’s leading payment platform, Alipay’s patent shows several functions required to circulate, issue or proceed payment for digital currency. The industry insider told the Global Times as follows;

“Judging from the patents, the first step of technological development has been basically completed,”

However, the People’s Bank of China (PBoC) early this year acknowledged that the top leave design of the sovereign digital currency has been completed. However, he quietly noted that the currency is progressing smoothly.

With the coronavirus epidemic continued, people rarely care about fiat or paper money that may likely act as a reason for more COVID-19 cases. That being said, Bitcoin and other digital currencies have been considered as a feasible solution. On the same stance, Industry Insider suggested that the country should move forward of launching this digital currency in ongoing COVID-19 crises which have also affected the financial system.

Nonetheless, Cao Yan, managing director of Digital Renaissance Foundation, stated that;

“If there is a chance China is considering lowering its interest rate into negative territory as a final option and directing such policy to commercial loans and lending, a circulated digital currency rather than M0 will be able to achieve that,”