Is it the end of U.S. Dollar era? China is trying to rewrite global Currency with its Digital Yuan

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China is already living in the future, whether it be the home to the most number of skyscrapers or the Thousands of tech savvy enterprises sprouting every year. China is undoubtedly one of the most rapidly changing ambitious nations on the planet, from being called the cheapest labor market before.

While the whole world relies on banks for most of the payments, nearly a quarter of Chinese don't even have bank accounts and most of the Chinese bank account holders don't use bank-based transactions, leapfrogging many nations in cashless tech. Tech Giants like Alipay and Wechat have made possible for China to make mobile payments without banks or credit cards. 

China has the largest number of Mobile Payments (nearly a billion) every year in the world, being home to few of the most hi-tech cities like Hangzhou which is completely cashless adopting AI City Brain System by Alibaba, Chengdu or Shanghai where you can just pay with just your face and Shenzhen which qualifies to be called as the Mecca of Programmers and Tech enthusiasts. From homeless people to supermarkets, everyone has a unique QR code which doesn't share their personal information, which means China is beyond cashless.

As a rule of making every global product in Chinese version, now China wants to issue its own digital currency, which it officially calls as Digital Currency Electronic Payment(DC/EP) or informally Digital Yuan. 

Image Source: Ledger Insights

Digital currencies are not new, but what is game-changing about this digital RMB is that it's backed up by a government officially. Technically, it is the same as the paper currency that will be replaced by the DCEP and the People's Bank of China has vowed to protect its privacy.

Experts say that the DC/EP is not just another digital wallet. The digital version of Renminbi (RMB), as the Chinese currency is officially known, could eventually be transferred across borders without going through the Dollar-based international trade system. Meaning that, this Digital Yuan could allow Iran to easily evade U.S.  sanctions even without being spotted by the U.S.

This could be an opportunity for China to encourage making international payments using its own currency, which, it has already did previously.  In 2018, China started its first step to make payments in Yuan to trade Crude Oil from the Middle-east, being the biggest Crude Oil importer in the world.

Not only China, But also its allies, Russia and Angola, are keen to break the dominance of U.S.dollar.
These ambitions to trigger instability of U.S.D could shift other payments like what China aims to impose.

Image Source: U.S. Dollar and China Yuan notes are seen in this picture illustration June 2, 2017. REUTERS/Thomas White/Illustration/File Photo

Most importantly, All of the Chinese banks and most of its ginormous tech companies join hands in embracing the DC/EP digital currency, which terrifies all of the cryptocurrency world and also Mark Zuckerberg's ingenious brainchild 'Libra' which is Facebook's own version of Blockchain technology, aiming to the unbanked population. Libra was designed to be kept in a digital wallet in facebook's Messenger & Whatsapp as well as a stand-alone app. Unlike Volatile cryptocurrencies like Bitcoin, Libra was planned to be backed up by a basket of real world currency reserve to add stability against the biases like in the crypto market. 

Yet, a lot of MNCs had turned off Libra even before the U.S. Parliament happened to be a Hurdle as with the risks involved in monetary system handled by a private firm. All the Corporate backers departed one by one, with PayPal being the first, after governments blocked Libra in Mid 2019.

But in contrast, several U.S. multi-national corps like McDonald's, Starbucks, Subway, & others have already pledged to adopt the upcoming digital Yuan in the Provinces of China. The reason behind this bet is the stable financial back-up by the People's Bank of China. This is a huge nightmare for Libra without even stepping into the race.

Meanwhile the proportion of 5G users in China is expected to be more than 50% in 2025, the 5G race will provide more possibilities for the growth of cashless China.


Quick Fact:

China is so advanced in mobile payments that it's not very surprising to see signs which say "No cash acceptable" in many parts of the country.



Published by
Aravind | World Uncensored.

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