An eRMB-based trade settlement system as an alternative to dollar settlement. Which is set to be a first digital currency operated by a major economy.
The news was discussed on BBC World English. It is an economic war that could lead the world towards devastating war can’t be neglected if America don’t act accordingly. This is China’s old dream & can lead world in 2021.
As per China Daily, Essential to this is the rapid development and deployment of a sovereign digital currency within China and then followed by regional adoption. The first pilot program trial of this sovereign digital currency took place in Shenzhen, Suzhou, Chengdu and Xiong’an. This is now formally adopted into the monetary system with part of the government and state-sectors’ salaries and wages in these four cities paid in digital currency starting this month.
A sovereign digital currency provides a functional alternative to the dollar settlement system and blunts the impact of any sanctions or threats of exclusion both at a country and company level. It may also facilitate integration into globally traded currency markets with a reduced risk of politically inspired disruption.
Sina News said the currency would be used to subsidise transport in Suzhou, but in Xiong’an the trial primarily focused on food and retail. A screenshot purported to be of the app required to store and use the digital currency has been circulating since mid-April.
Digital payment platforms are already widespread in China, namely Alipay, owned by Alibaba’s Ant Financial, and WeChat Pay, owned by Tencent, but they do not replace existing currency.
Xu Yuan, associate professor at Peking University’s national development research institute, told broadcaster CCTV that because cash transactions were offline and transaction data from existing payment platforms was scattered, the central bank was unable to monitor cash flow in real time.
“Although there is little change from the perspective of user use, from the perspective of central bank supervision, future forms of finance, payment, business and social governance etc, this is the biggest thing ever.”
On 17 April, the digital currency research institute at the People’s Bank of China, which is developing the system, said the research and development of a digital renminbi was “advancing steadily” and top-level design, functional research and development, and debugging had largely been completed, according to a CCTV report.
A decline in cash usage is expected to continue amid growing popularity of digital payment platforms as people are avoiding physical contact a Post COVID19 scenario as well.
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