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Starting next week, China will experimentally start using digital currency to make payments in the country’s main cities. The country’s central bank has been trying to create a digital currency for the past few months. It is the first government-managed digital currency in a large economy.
The experimental exchange of these new digital currencies will start first in various cities, including Shenzhen, Suzhou, Chengdu, known as e-RMB. In addition, the digital currency will be introduced in the city of South Beijing, Seongan. These cities will host various events of the Beijing 2022 Winter Olympics.
This digital currency will be used to pay the April salaries of some government employees. Subsidized bus service in Suzhou City will be the currency of the transaction, but the city of Seongan is emphasizing the use of the currency in food and retail purchases.
An online portal called the Global Government Forum also called on 19 retailers, including McDonald’s, Starbucks and Subway, to test the digital yuan in the new Zhengan area. However, Starbucks did not do so directly. But news from others has yet to be received.
The People’s Bank of China said in a statement that the digital currency would not be launched on a large scale for short-term use. The amount of digital currency currently available on the market is not likely to cause inflation.
China wants to introduce another currency against the dollar for investors and traders. And the digital currency is one of them. Many see China’s introduction of the digital currency as a weapon to fight the dollar. A sovereign digital currency is a viable alternative to the “dollar settlement system,” according to an opinion piece published in the China Daily. The threat of sanctions or boycotts of any kind can be prevented at the country or organization level. You can reduce the risk of a boycott by being politically motivated in the global currency markets.
Previously, China had launched a blockchain domestically. Called the Blockchain Based Services Network (BSN), this blockchain network launched since April. BSN will inspire the global digital economy of the future. This could lead to a radical change in digital currency transactions. Through the blockchain, China could challenge the global influence of the US dollar. This has been indicated in a Voice of America report.
Since 2014, China has been considering the digital currency as a way out of the US dollar crisis. Since then, the country has advanced with digital currency technology. And it is currently seen as an important national strategic objective.
In the 2017 National Economic Plan, China emphasizes advanced blockchain. He plans to use the technology behind popular digital currencies like Bitcoin. Then, in October 2019, President Xi Jinping proposed to the Politburo to improve the blockchain. Later last month, BSN, China’s largest blockchain network, was launched. And the digital currency will launch this month.
Source: The week.
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