China moves forward to implement an experimental project on its Digital Currency Electronic Payment (DCEP). However, the sovereign Digital Yuancurrency is going to be available for small retail transactions only.
The news made by the Central Bank of China comes after speculations of a housing transaction that claims to back up the utilization of DCEP. The speculations further mentioned that someone in Shenzhen, South China’s Guandong Province, sold the property later receiving large payments in the form of virtual currencies through a local bank. The currencies, however, were not convertible to fiat notes.
Digital Yuan is the World’s First CBDC
The DCEP protocol runs on blockchain technology, and it is the first Central Bank Digital Currency globally, issued by the People’s Bank of China. DCEP is the only legal digital currency in China, unavailable on any cryptocurrency exchange. The Central Bank of China tracks the DCEP, assuming responsibility as regulators.
The primary goal of the Digital Yuan is to give China a fighting chance against competitors. Likewise, it hopes to push blockchain and CBDC mass adoption on a global scale. Additionally, it hopes to achieve data collection on money creation and bookkeeping presently, helping in money circulation and acting on monetary policies.
Gradual Adoption Process of DCEP
The implementation process is currently ongoing in various parts of China, including Shenzhen, the capital of Southwest China’s Sichuan Province, Xiogan New Area in Hebei Province, and Suzhou in East China’s Jiangsu Province.
Furthermore, Beijing News revealed reports on how various departments under the central bank digital currency in Shenzhen announced recruiting positions meant for blockchain developers and engineers.
A comment made by Wang Peng, an assistant professor of the Gaoling School of Artificial Intelligence, based at the Renmin University, stated to Global Times that the main aim of the experiment is to guarantee the digital currencies operate smoothly. He further added that the test would determine the flow of DCEP from the Central Bank to financial industries.
Gaining Financial Headway
The PBoC will only start large transactional circulations if the small retail sector is thriving in the experiment. Implementing DCEP after years of research gives China a more significant advantage to succeed in the commercial industry globally, despite its crippling relations with the USA.
Therefore, the risks of financial crimes like money laundering, illicit financing, and defrauding. Under the centralized regulation of the Central Bank, the DCEP will gain stability as the traditional Yuan.
Numerous efforts were put in place by the Chinese to adopt blockchain technology to make it in the competitive crypto world. For this to be successful, China’s digital currency policies ensure only governments and central banks issue DCEP.