China’s central bank has just launched an app for paying with digital yuan. The app is available to all citizens of the country; however, only residents of 10 specific cities, including Beijing, Shenzen, Chengdu, and Shanghai, can actually use it.
It’s important to note that digital yuan is not a cryptocurrency. The People’s Bank of China (PBOC) has developed it as an alternative to fiat money. The yuan doesn’t operate on blockchain and is completely controlled by the government. e-CNY is essentially just physical cash converted into a digital form.
According to the app’s description, everybody at “Beijing Winter Olympic scenes” will be able to pay with e-CNY. The authorities reportedly prepared the launch specifically for this year’s Olympics.
The new app uses a two-tier system that transfers e-CNY from the PBOC to commercial banks. Banks will then distribute the currency directly to consumers. Some of them allow foreigners to sign up for an e-CNY account using their passport and phone number, as well as convert foreign currency to e-CNY.
To date, the opportunity to pay with e-CNY was available to only certain users since the PBOC was testing its system. However, several retailers, such as e-commerce company JD.com, have already accepted it as payment.
According to the Deutsche Bank, the app will have “controlled anonymity” – users will be able to conceal their identities from counterparties, but it will still let the authorities monitor transactions for illegal activities like money laundering.
Although e-CNY is only available in 10 cities, Chinese banks are working hard to promote it. There have been numerous lotteries, distributing a total of 10 million digital yuan (worth about $1.47 million USD at the time) to people in Shenzen in October 2020, 20 million digital yuan (or ~$3 million USD) in Suzhou in December 2020, and 40.2 million digital yuan (or ~$6.2 million) in Chengdu in February 2021.
China has opened its e-CNY wallet app for public download in the country’s iOS and Android app stores, preparing for this year’s Olympics.
The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.
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