What is e-CNY and why does China want it?
The e-CNY is a digital version of the Yuan, China’s official currency, which is issued and controlled by the People’s Bank of China, the country’s central bank. Unlike Cryptocurrencies like bitcoin, which are based on a decentralized technology called blockchain, e-CNY is a centralized currency that allows the Chinese government to track all transactions and regulate the flow of money.
China’s goal with e-CNY is to create an alternative to the US dollar-dominated global financial system and reduce its reliance on foreign payment platforms such as Visa or Mastercard. In addition, e-CNY could facilitate international trade and cooperation among countries participating in the China-led New Silk Road initiative.
How is e-CNY used?
e-CNY can be stored and transferred using a mobile app developed by the People’s Bank of China, which works without the need for an internet connection or a bank account. Users can scan a QR code or use NFC (Near Field Communication) technology to make payments with their smartphones.
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How is China promoting the use of e-CNY?
China is advancing its project to create a sovereign digital currency, the e-CNY or digital Yuan, which could compete with the US dollar in the future. One of the ways in which the Asian country is promoting the use of e-CNY is by paying the salary of public sector workers entirely in this currency.
According to a CNN report, a city in eastern China, called Changshu, will start paying the salary of 4,900 public employees and other state-owned companies in digital Yuan between June and September 2023. This initiative is part of a pilot program that seeks to promote the adoption of e-CNY among citizens and businesses.
China has conducted several trials with e-CNY since 2020, doling out millions of digital Yuan to residents of various cities including Shenzhen, Suzhou, Chengdu, and Beijing. It has also allowed some companies like Starbucks, McDonald’s or Subway to accept e-CNY as a form of payment.
When will e-CNY be officially launched?
According to some experts, China could officially launch the e-CNY before the Winter Olympic Games to be held in Beijing in February 2024. However, there are still many challenges and obstacles for the digital Yuan to become a global currency, such as user trust, cyber security, interoperability with other digital currencies, and resistance from the United States and its allies.
Conclusion
The e-CNY or digital Yuan is a sovereign digital currency that China is developing in order to challenge the dominance of the US dollar in the global financial system and facilitate its New Silk Road project. The e-CNY can be used through a mobile application that does not require an internet connection or a bank account, and that allows the Chinese government to have full control over the money. China is promoting the use of e-CNY among its citizens and companies, paying the salary of some public workers in this currency and conducting raffles and pilot tests in various cities. e-CNY could be officially launched before the 2024 Winter Olympics, but it still faces many challenges and resistance to become a global currency.
