For now, central bank digital currencies (CBDCs) are side projects for dozens of governments. Like any good side-hustler, the governments that have made the most progress are making a lot of noise about it.
China’s digital yuan comes to mind. Most recently, the People’s Bank of China began testing the currency in Hong Kong and exploring cross-border transfer protocols with Thailand and the UAE. Digital yuan, known as Digital Currency Electronic Payment (DC/EP), is controlled by a central authority and administered through commercial banks.
DC/EP’s expeditious rollout is driven by China’s robust fintech sector and bitcoin. After studying the cryptocurrency, Beijing’s top banking official was equal parts “dazzled” and “frightened,” per the WSJ.
- The digital yuan is trackable from the top, though officials say some anonymity is built in.
- Digital yuan could become a financial workaround for any company or regime that is persona non grata in Washington.
- China could set expiration dates for digital yuan, inducing citizens or companies to spend it more quickly, the WSJ reports.