The official digital currency of the Central Bank of China, known as CBDC, can be used in international transactions carried out by the Asian country.
In these times of pandemic, while other central banks are paralyzed by the measures they must take to counter the crisis, China and its central bank are testing their digital currency. Which is called Central Bank Digital Currency, but which by its acronym in English is known as CBDC, and is the official currency of the Central Bank of China. With which it seeks to promote the adoption of the digital yuan above the dollar, and even Bitcoin.
For several years now, China has been working on the development and implementation of its CBDC digital currency. Which is currently in the advanced stages of development and testing in several cities in the country. Therefore, it is likely that it will soon be implemented in national and international transactions carried out from this nation.
Likewise, the Asian country is developing laws and regulations that will allow the use and application of this new digital currency. And China has made it a priority to develop research that allows it to implement blockchain technology, as well as promote its digital currency project that began in 2014.
However, recent comments made by the CEO of NEO, the Chinese token of the Ethereum network, and other observers argue that this project seeks to prevail against the US dollar and Bitcoin.
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Can China's CBDC challenge the dollar and Bitcoin?
The implementation of the digital yuan may mean the first step towards a major change in the global economy. So they have expressed several international observers. Those who have studied the development that this project has had for several years. Furthermore, it is expected that the digital currency can be largely implemented by the Beijing 2022 Winter Olympics.
In Beijing, for example, it is more common for its citizens to make payments through digital transactions, rather than using physical money. Therefore, CBDC seeks to design a digital and electronic fiat money model. Instead of just having an interface to carry out electronic transactions. As are usually the applications for bank transfers, among others.
This is what it means CBDC: digital cash fiat money. One through which citizens will be able to continue making their payments, purchases and transactions in a much easier, faster and safer way. But it also implies control over users that the government could never obtain through traditional fiat money.
Likewise, it is estimated that the CBDC can favor the shift in the importance and positioning of the dollar in the current economy. Since through this digital currency, the Asian nation can begin to strengthen its financial system and eventually transform the global economy.
For its part, in relation to cryptocurrencies, the Chinese government believes that the implementation of its own digital currency will help to stabilize the country's economy. Especially with the large number of projects and new projects in development based on private cash. And they can affect the nation's economic system.
Likewise, in relation to Bitcoin, the Chinese government believes that they could cause a break in the economy. By operating in a decentralized manner and without control by a government entity. Which can favor the execution of economic activities outside the sight and reach of the government and its competent entities.
Pilot test the new digital currency
Pilot tests for the implementation of CBDC have been carried out since approximately April. Thus, in 4 cities in Beijing the currency has been distributed as a form of transportation subsidy. The first cities to implement CBDC are: Shenzhen, Suzhou, Chengdu and Xiong'an.
In turn, the Agricultural Bank of China It is also testing the new digital yuan currency. Just as a pilot plan is being included to use the currency within the large McDonald's and Starbucks fast food franchises that are located within the aforementioned cities.
Likewise, it is expected that CBDC can be implemented to provide social aid and stimulus packages to the population. With which we seek to counteract the consequences generated by the COVID-19 pandemic.
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