Soon, it will also be the largest retailer so far to test and accept the Digital Yuan for purchases on their site. The Digital Yuan is a central bank digital currency, or CBDC, issued by the central bank of China, the People’s Bank of China. Starting with a test program launching later in the month, JD.com users will be able to purchase a limited number of items on the site: a first for the major retailer.
What are Central Bank Digital Currencies?
Central Bank Digital Currencies, better known as CBDCs, are fiat currencies created and distributed by government treasuries, but in a digital manner. These CBDCs can utilize blockchain technology. However, they are fully centralized and controlled by the state governing body. For governments, CBDCs have many benefits over traditional currency. For example, there is the ability to easily track citizen spending and money transfer habits. Governments can freeze accounts deemed threatening to the state, and more. Governments peg these currencies to the fiat currency of the nation. This means that they will not fluctuate massively in price like most cryptocurrencies. Because they remain relatively stable, users will be able to transact globally more readily.