The People’s Bank of China began researching and developing the digital yuan six years ago, and although the project has advanced significantly in 2020, the official launch date is still unknown.
For China, being the first country in the race to issue a central bank digital currency (CBDC) is a necessity and a national priority. A recent report from the People’s Bank of China (PBoC) shows that the country is placing a strong emphasis on a geopolitical strategy when considering the development of its digital currency.
Over the weekend, in China Finance, in a magazine run by the People’s Bank of China, the central bank said that China needs to break the hegemony of the US dollar and internationalize the yuan.
China ‘Needs’ to Be the First in Global CBDC Competition
The world powerhouse and the main competitor of the United States does not seem to be neglecting what is at stake in the issuance race of a CBDC. For China, which relies on US payment systems like SWIFT, a digital yuan could cause significant shifts in the geopolitical status quo within international finance, as well as an opportunity to break the supremacy of the dollar and internationalize its national currency.
Additionally, it is added to this the possible benefits that digital currency provides for national monetary policy, an issue that is even more crucial in a post-pandemic panorama defined by economic challenges. In a sustained effort, China appears to be fast approaching the launch of the digital currency. This year, state-owned commercial banks and companies have started testing a digital yuan wallet. According to Reuters, at the end of April 2020, the PBoC research unit has filed 130 cryptocurrency-related patent applications, covering the range of issuance, circulation, and implementation.
Currently, the Asian nation expanded its test program to ten regions of the country, including several of the big cities, such as Beijing. It has also been rumored that the PBoC plans to use the digital yuan at the 2022 Winter Olympics.
United States, China, and a List of other Countries
China and the United States have been in close competition in recent years in the field of research and technological development and there is no doubt that the advancement in CBDC is included in that global rivalry.
With countries such as France, the United Kingdom, Brazil, South Korea, the Bahamas, and others announcing progress on CBDC this year, it appears that the coronavirus pandemic is accelerating the global battle for digital payments. Among all of them, the United States does not seem to be lagging, although none has shown a state as advanced as that of China.
The PBOC is researching, and developing digital currency since 2014, but its official launch date is unknown. Meanwhile, throughout 2020, the Asian country announced various advances in its development. According to previous reports, the digital yuan is already under test in Suzhou city as part of a transportation subsidy scheme for the local government.
Likewise, important banks and companies in the country reported their participation. As previously reported by DiarioBitcoin, the Chinese transport platform DiDi and the delívery company, Meituan Dianping, are some of the foremost companies in the country that are in talks with the PBoC to add the digital yuan to their payment mechanisms. More recently, China’s major state-owned commercial banks announced that they were conducting large-scale internal testing of a digital wallet application for the yuan.
By: Jenson Nuñez.