China is (almost) ready to launch its digital currency

In the middle of the health crisis it had to face, China has not stopped pushing for the realization of its Central Bank Digital Currency (CBDC) distribution project, the digital version of the yuan, issued by the Central Bank of China.

The first pilot tests were launched in April 2020 in four regions, with a result of more than 4 million transactions corresponding to over 2 billion yuan (about 250 million dollars), with a lottery with digital currency up for grabs to encourage the initiative. In 2021, a continuation of the test in five other regions is planned.

China is pushing so hard for these projects as they see it as a crucial competitive advantage in the digital economy. To date, the physical yuan is not considered as one of the main currencies, but its transformation into digital could lead to a leadership in the digital market that would lead to greater universality of the currency itself.

This step would ensure a new level of international supremacy, which could affect the buying and selling of the Chinese population but not only.

The DCEP (Digital Currency Electronic Payment) is based on a blockchain technology (DTL – Distributed Ledger Technology) like bitcoins, but on the contrary it would be neither decentralized nor independent. China is already one step ahead in carrying out transactions electronically via apps such as Alipay or WeChat Pay, but the state’s digital currency would lead to elimination of transaction costs for merchants as it would be issued by the government.

An official launch date has not yet been announced, but it will certainly precede the results on which the ECB and the FED (Federal Reserve Bank) are still thinking, more than working.