The PBOC warns that its digital currency will bring great changes to the world’s finance. To break the monopoly of the US dollar, the country will internationalize its new network of payment systems.
China is rushing to implement the digital yuan to win a technological race that also involves finance. The People’s Bank of China (PBOC) considers that the Asian nation should become the first to issue its digital currency as part of an effort to internationalize the yuan and reduce the global dependence on the US dollar.
“The issuance and circulation of the digital currency will bring great changes to current international finance. China has many advantages and opportunities in issuing fiat digital currencies, so it should accelerate the pace to be the first,” stated an article in China Finance, an official PBOC magazine.
According to the publication, efforts to issue sovereign digital currencies will become a kind of “new battlefield” of competition between countries, which will produce great changes in international finance.
China also needs to establish a new network of payment systems to break the monopoly of the US dollar, as a key part of the internationalization of the yuan. Since last April, the PBOC’s digital currency research institute has already filed 130 patent applications related to the digital yuan, adds the article. All this is among the functions that would form a complete supply chain to support the launch of its Digital Currency/Electronic Payment (DC/EP) system.
By establishing more and new alliances with trading partners, China will surely try to impose new technological standards with its digital yuan. However, the Asian country shows that it trying to solve all the aspects of its DC/EP system in the domestic market before jumping into the international market.
In that quest to ensure that the digital currency works without errors, the PBOC’s Digital Currency Research Institute has conducted tests in several cities. It recently announced a strategic cooperation agreement with JD Digital Technology, one of the main Chinese e-commerce websites.
The agreement aims to promote the development of mobile applications and blockchain platforms, as well as encourage the creation of wallets that support the digital yuan, according to Chinese media.
Didi Chuxing, a Chinese equivalent of Uber, previously partnered with the Central Bank of China to experiment with the digital yuan in the transportation industry. The Asian giant of shared rides records around 30 million transfers per day and has a platform with 550 million users.
On August 14th, the Ministry of Commerce of the Asian country announced the extension of the tests on the digital yuan to 3 new regions, besides those where they are implementing the pilot plan. State commercial banks have also started to test digital wallets. For example, a few days ago, the Construction Bank of China activated a wallet for the digital yuan. However, it disabled its mobile application before a lot of users who had requested it.
By Alexander Salazar