After launching its own, official Blockchain network last week, China now becomes the first country to pilot its own digital currency. The Cryptocurrency called ‘e-RMB’ is being piloted in four major Chinese cities including Shenzhen, Suzhou, Chengdu and Xiong’an. China is also testing the digital currency in areas that will host some of the events for the 2022 Beijing Winter Olympics. Moreover, e-RMB has also been formally adopted into the cities’ monetary systems.
According to a report by The Guardian citing the China Daily, a statement by the People’s Bank of China (PBOC) said that the digital currency “will not be issued in large amounts” for public use in the short term, and that the digital currency in circulation would “not lead to an inflation surge”. The pilots’ aim in all locations is to “optimise and improve” functionality ahead of the wider rollout of the currency.
Citing an official, the China Daily report also suggested that the public in China would be able to convert money in their bank accounts to the digital version and make deposits via electronic wallets. The underlying tech of e-RMB allows the digital currency to be exchanged without an internet connection and can also be used to make contactless payments.
Additionally, the e-RMB–would be used for paying the April-month salaries to some government employees and public servants. The digital currency will be used to subsidize transport in Suzhou, but in Xiong’an the trial primarily focused on food and retail, The Guardian reported.
A report by China.org.cn, local government employees in Xiangcheng district of Suzhou, Jiangsu province, whose salaries are paid through accounts in the country’s “big four” banks — Bank of China, China Construction Bank, Agricultural Bank of China and Industrial and Commercial Bank of China－have been asked to install “digital wallets “on their cellphones this month, according to the local government.
As per few speculative reports, some global food brands including McDonald’s, Starbucks and Subway have agreed to be part of the e-RMB trial.
“Compared with paper notes and coins, the digital currency can cut issuing costs, such as expenses on printing, transportation and management,” said Dong Ximiao, a researcher at China’s National Institution for Finance and Development told China.org.cn.
It is to be noted that Chinese money comes by two names — the Yuan (CNY) and the people’s renminbi (RMB). The difference between Yuan and RMB is subtle as RMB is the official currency of China where it acts as a medium of exchange, the yuan is the unit of account of the country’s economic and financial system.
“Compared with paper notes and coins, the digital currency can cut issuing costs, such as expenses on printing, transportation and management,” said Dong Ximiao, a researcher at National Institution for Finance and Development.