China has finally released its long-awaited digital yuan whitepaper, revealing, for the first time, the features of the vastly advanced central bank digital currency. The People’s Bank of China, in the whitepaper, also outlined some of the targets it has set for the CBDC, including financial inclusion and cross-border transfers. It also revealed that in the pilot phases that started last year, it has processed over $5 billion in digital yuan transactions.
China has established itself as the undisputed leader in the CBDC arms race. And while some countries like the Bahamas have already launched their CBDCs, China is the first major economy that seems to be edging closer to a digital currency. And now, for the first time, the world is able to dig deeper into the CBDC, also known as the digital renminbi, or e-CNY.
China started developing the CBDC in 2014, partly motivated by the rise of Bitcoin, which the PBoC describes as “claiming to be decentralized and entirely anonymous.”
However, given their [cryptos]lack of intrinsic value, acute price fluctuations, low trading efficiencies and huge energy consumption, they can hardly serve as currencies used in daily economic activities. In addition, cryptocurrencies are mostly speculative instruments, and therefore pose potential risks to financial security and social stability.
The PBoC isn’t a big fan of stablecoins either, predictably so. It believes that these stablecoins will “bring risks and challenges to the international monetary system, payment and clearing system, monetary policies, cross-border capital flow management and etc.”
Download the whitepaper here
