As The CBDC Era Draws Near, China’s Digital Yuan Project Leads The Roost

With each passing month, it appears as though the list of countries looking to adopt central bank-backed digital currencies (CBDC) is growing at an increasingly rapid pace. For example, Sweden and Japan recently concluded initial testing related to their respective CBDC projects. Meanwhile, the Bank of England announced that it has established a crypto taskforce in order to assess the long-term efficacy and practicality of issuing a state-backed digital currency in the UK.

Those Countries Trail Behind China

That being said, anyone even remotely knowledgeable about the global CBDC landscape knows that China’s e-CNY (digital yuan) project is by far ahead of any of its contemporaries by a mile. For starters, while most countries are just beginning to commence real-time testing of their respective tokens, the digital yuan has already seen residents of major cities like Beijing, Chengdu, Hong Kong’s greater bay area utilize the digital asset for daily financial transactions such as grocery shopping, paying for public transportation, etc.

The Digital Yuan Express Can’t be Stopped

When launched, the digital yuan’s primary goal was to help streamline the internal monetary processes of China’s various state-run banks. However, due to the resounding success of the project’s trial, its scope was stretched to include daily commercial transactions as well. Testing was basically carried out via a host of airdrops that allowed residents to register and potentially win 200 digital yuan (approx. $31) each.

However, that’s literally just the tip of the iceberg because just last month, the local administrative regime for China’s Xiongan New Area released a memo claiming that it had started paying its employees using the e-CNY token. Not only that, other smaller regions across the land also seem to be gravitating towards the use of blockchain-based payment systems so as to limit their reliance on bank notes and other physical assets.

To help boost the country’s digital adoption drive, a number of major retailers like Alibaba, TMall, Hema Groceries have joined hands with the government, thereby allowing their customers to spend their tokens across a number of their outlets. The significance of this move lies in the fact that these partnerships have enabled the e-CNY to reach the wallets of more than a billion people.

China’s Economic policies are Geared Towards “Controlled Digitization”

Despite China pushing ahead with a head full of steam in regard to its CBDC project, the eastern powerhouse has maintained a relatively harsh position towards its local crypto sector. For example, just last month, the country issued a blanket ban on its mining industry, forcing some of the largest Bitcoin pool operators in the world to relocate their businesses.

The government has also prohibited banks, money lenders, etc from dealing with crypto service providers, criminalizing any customer registrations, trading, clearing and settlements related to digital currencies. What all of this seems to suggest is that China wants to take a regulated approach in terms of promoting any sort of crypto innovation/adoption by putting its CBDC offering ahead of everything else.

Lastly, it bears mentioning that while certain smaller nations have already released their very own state-backed tokens, their use has, by and large, remained extremely limited. In this regard, China has been extremely pragmatic in its terms of spurring the adoption of its e-CNY token by entering into well thought out partnerships with big-name players operating within its retail, industrial and commercial markets.

What Lies Ahead?

There’s absolutely no denying that China is currently front-and-center of the ongoing CBDC revolution, however, what is interesting to note here is that as the eastern giant continues to make massive strides with its digital yuan project, a number of nations continue to watch the country’s every move so as to learn how to implement their very own sovereign digital currencies.

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