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Introduction
The future of Digital Currencies is looking quite bright. The revolution ushered in by Bitcoin and other cryptocurrencies mean that governments are now serious about exploring the benefits of digital currencies.
One such country, which has been in the news in recent years has been China. It is a bit of an open secret that Bitcoin and Blockchain development, especially in the area of mining has flourished in China.
Even when the world was coming to terms with the Coronavirus pandemic, China was quick to roll out its new state-sponsored crypto- Digital Yuan for internal use.
In this article, we look closely at Digital Yuan. We speak to experts to understand how it works and what implications does it have for the world economy.
Digital Yuan: What you need to know?
According to papers published by leading media publications backed by the Chinese government, a Digital Yuan is just like a physical yuan. China’s Central Bank, PBOC is leading the project.
The rollout of the Digital Yuan looks promising especially when you take into account the intentions behind the same. China is looking to slowly make its economy go cashless. The intention behind the same is to protect government control over the economy by keeping other elements like Bitcoin and Facebook’s Diem at bay.
With the Digital Yuan, users will have the benefit of using their money in the same fashion as they do with Digital Wallets like Alipay or WeChat Pay.
This will give Chinese authorities the insights they need to understand how finance is flowing through the economy. What sectors are benefitting and receiving most of the payments, and which sectors need more assistance.
Digital Yuan and the Rise of Central Bank Digital Currencies the world over
According to the bit qt app, CBDCs are something, which every country is looking at. The benefits of CBDCs include proper monitoring of cash flows, faster payment processing, and more stability. It is also linked to the idea of eliminating as much corruption in the system, something China and its billionaires are notoriously famous for.
If you look at countries like Germany, Japan, and others, almost everyone is working on their own CBDCs. Bitcoin has shown them the advantages that can be had when you start using digital currencies.
However, at the same time, it is true that many countries want to ensure sovereignty over their financial systems. Hence the move towards CBDCs.
Like in most industries, China has taken the lead when it comes to showing the world what it is capable of. It has already launched its own CBDC when the entire world was battling the pandemic.
Why China is Aggressively Pushing for its Digital Yuan?
For a very long time, China has been keen on asserting its dominance in the international community. Its recent stand-offs with the United States and some other countries in Asia have signaled its intent to accept a much more global dominant position for itself.
The American Dollar is used as the hegemonic currency in world affairs. International trade and commerce run on the dollar valuation. This automatically gives America and its businesses a far greater financial and economic clout in world affairs.
With the Digital Yuan, China wants to push an agenda wherein more international countries start using the Digital Yuan based on its merits. Many academicians and policy experts have signaled that this is China’s attempt to take over the mantle of an international currency from the American dollar.
The Final Word
For investors in Bitcoin and other cryptocurrencies, this is a very good sign. As more and more countries start to understand the benefits of digital currencies for their economies, acceptance for Bitcoins and others will automatically grow.
Governments will start to espouse the benefits of the same to their population and this will allow it to go mainstream. Something, which can definitely work to Bitcoins advantage in the coming years.
