Countries across the world are pushing forward plans for Central Bank Digital Currencies. Most government agencies are still examining benefits and risks, but this highlights a widespread motivation to consider the launch of federal digital currencies.
Some analysts believe that CBDCs have become an augmentation of existing worldwide competitions, with some observing digital currencies at the focal point of the money battle to supplant the dominance of the dollar. China, the emerging global powerhouse, has made its digital yuan a top priority, with China’s central bank already conducting pilot tests on the CBDC in some major cities, as reported earlier.
Li Lihui, former President of the State Bank of China, affirms that the digital yuan can replace physical cash, but the asset needs to address four key conditions.
While speaking to People’s News on May 5, Lihui emphasized that unlike payments services like Alipay and WeChat Pay, the CBDC is developed to be autonomous from any system or bank. However, Lihui stressed that digital yuan is obliged to meet four prime conditions to supplant physical cash or existing payment solutions:
“Whether the digital Yuan can become the dominant form of currency and mainstream payment means, depends on whether it has greater efficiency, lower transaction costs, enough economic scale with commercial value, and people’s acceptance.”
Chinese Crypto Community is Excitement about Digital Yuan
The digital yuan is currently in the pilot phase and is creating excitement among the Chinese crypto community. As of late, searches on the effect of the digital yuan and cryptos have soared in domestic search engines.
China leads the way in terms of employing blockchain technology, a means to prepare themselves for China’s national digital currency debut.
Several analysts speculate that Digital Yuan will have a positive impact on the crypto space. Increased employment in the sector pulls more people and their social networks into the digital asset ecosystem and the launch of sovereign digital currency adds legitimacy to decentralized options.
What remains to be seen is whether or not payments software like Alipay is already so dominant that China’s citizens see no need in adopting a sovereign digital currency.