Among the world's biggest economies, China has become the frontrunner in developing a Central Bank Digital Currency (CBDC). The Asian giant of the DC/EP, as its digital currency is known, in September and is currently rolling it out on within the country. Here is a brie💯f primer o👍n the digital currency.

What Is DC/EP?

The Digital Currency Electronic Payment (DC/EP) is a digital version of the yuan – China's national currency. The DC/EP is backed by yuan deposits held by China's 澳洲幸运5官方开奖结果体彩网:central bank and has been under development for slightly more than five years. Under the current arrangement, banks arꩲe required to convert a part of theirౠ yuan holdings into digital form and distribute them to businesses and citizens via mobile technology.

How Is DC/EP Different ൲From Existing Cryptocurrencies?

The biggest difference between DC/EP and existing cryptocurrencies is their legal status. The DC/EP can be used as a payment mechan🎉ism and is acceptable as legal tender, ꦯbut the legality of using cryptocurrencies to pay for goods and services in China is still unclear.

Besides this, there are two other main points of difference between DC/EP and cryptocurrencies available in the market. The first one relates to decentralization. Cryptocurrencies are decentralized, meaning their economics and supply are not controlled by a single entity. In contrast, the levers for the digital yuan will be firmly controlled by China's government.

The second difference between a standard cryptocurrꦯency and the digital y🎃uan is anonymity. The former is anonymous, in varying degrees depending on the coin, while the latter is not. As mentioned earlier, the Chinese government will be able to track the currency moving through its economy and monitor its usage.

What Are the Benefits of the Digital Yuan 🐻for the Chinese Government?

First, the digital currency will enable the Chinese government to better track the flow of money through its economy and make better planning decisions. Cash remains the dominant mode of transaction for payments in China, but new forms of payment that leapfrog card system have in recen🌄t times. These new payment methods rely on digital transfers of money using an assortment of technology intermediaries including mobile devices, QR codes, and token systems.

Payment firms like Alibaba Group Holding Limited's (BABA) AliPay and Tencent Holdings Limited's (TCEHY) WeChat are at the forefront o𒊎f this change. A digital yuan fits in nicely with this transformation. Iꦦt also serves the government's needs because digital tokens are easier to track than cash.

Second, a digital yuan will enable China to♒ bring its unbanked population into the mainstream economy. China has the large🌠st figure for , and a digital currency will enable more of them to participate in the mainstream economy without expensive banking products and infrastructure.

A third benefit of the digital yuan is that it might help propel the renminbi to 澳洲幸运5官方开奖结果体彩网:international reserve status. After the financial crisis more than a decade ago, international bankers and economists 🐟have increasingly discussed the possibility of a replacement to the U.S. dollar for international trade.

As the main mode of transaction in the world's second biggest economy, China's currency should be a natural contender for the spot. However, the U.S. dollar still accounts for 88.3% of all international settlement transactions while the renminbi has only 4%. Digitization of the currency will help fast-track international settlements using the currency and help make it more popular among international traders.