China's digital currency

Will China be the first to issue a sovereign digital currency?
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China was the first major economy to begin exploring its own digital currency in 2014, though it is yet to launch the proposed digital yuan. Unlike cryptocurrencies such as bitcoin, which are not centrally controlled, China’s “sovereign” digital coin would fall under the authority of the People’s Bank of China. China maintains a blanket ban on the trading of any cryptocurrencies, as the government regards them as a source of financial risk.

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As governments grow increasingly wary of cryptocurrencies, centralised digital currencies are seen as a way to preserve public trust. China’s digital yuan is pushing the rest of the world to create their own digital currencies, putting cryptocurrencies under pressure.
The biggest risk for markets is an out-of-the-blue incident that exposes deeper problems in the financial system, triggering a major sell-off.
China’s decision to rein in cryptocurrency markets will be a game changer as other countries will follow its lead. Cryptocurrency market volatility made the headlines, but the real story was that policymakers are starting to flex their muscles.
While other governments have been dithering and taking a wait-and-see approach, Beijing has charted a course for financial stability, a sovereign digital currency and environmental protection.
Following the sensational debut of cryptocurrency exchange Coinbase on the Nasdaq, it is worth remembering that China’s experimental e-currency is no bitcoin.
Many central banks, led by the People’s Bank of China, are looking at digitising their currencies. As banknotes and coins go obsolete, we could be left with several virtual bank accounts and a few virtual currencies, all run by one smartphone.
The digital yuan offers stability and convenience that most popular cryptocurrencies do not, offering businesses convenience and improved risk management. It can also simplify cross-border transactions and promote overseas circulation of the renminbi
Bitcoin is an excessively risky and environmentally undesirable investment, not a sensible solution to emerging market problems. It cannot possibly serve as a store of value or reliable medium of exchange.
The digital renminbi is a sovereign currency fully backed by the state, does not require a bank account and has full oversight by Chinese banking authorities. Developing countries will embrace the convenience of China’s digital payment systems.
Mainland China is trialling a digital yuan that in a matter of years seems certain to do away with bulging pockets and purses full of change. But mastering digital technology can be difficult for the elderly, especially in one of the world’s fastest-ageing populations.
New money system to be set up by Beijing will be convenient for the public, make life harder for criminals and may help counter US dollar dominance
China has emerged as a world leader in digital payments, with the mainland rapidly going cashless and moving to create a fully digital sovereign currency. Meanwhile, cash remains stubbornly popular in Hong Kong as the Octopus card’s dominance has perhaps slowed take-up of other cashless payment options.
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