{"id":156007,"date":"2021-01-16T10:47:00","date_gmt":"2021-01-16T07:47:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/china-turns-up-pace-on-cbdc-release-tests-infrastructure-prior-to-adoption\/"},"modified":"2021-01-16T10:47:00","modified_gmt":"2021-01-16T07:47:00","slug":"china-turns-up-pace-on-cbdc-release-tests-infrastructure-prior-to-adoption","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/china-turns-up-pace-on-cbdc-release-tests-infrastructure-prior-to-adoption\/","title":{"rendered":"# China turns up pace on CBDC release, tests infrastructure prior to adoption"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_84 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a239d97b7ae7\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a239d97b7ae7\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/china-turns-up-pace-on-cbdc-release-tests-infrastructure-prior-to-adoption\/#Why_all_the_rush\" >Why all the rush?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/china-turns-up-pace-on-cbdc-release-tests-infrastructure-prior-to-adoption\/#Challenges_like_interoperability_and_privacy_remain\" >Challenges like interoperability and privacy remain<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/china-turns-up-pace-on-cbdc-release-tests-infrastructure-prior-to-adoption\/#Monetary_surveillance\" >Monetary surveillance<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/buradabiliyorum.com\/en\/china-turns-up-pace-on-cbdc-release-tests-infrastructure-prior-to-adoption\/#Can_it_be_replicated_elsewhere\" >Can it be replicated elsewhere?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/buradabiliyorum.com\/en\/china-turns-up-pace-on-cbdc-release-tests-infrastructure-prior-to-adoption\/#Is_the_US_dithering\" >Is the U.S. dithering?<\/a><\/li><\/ul><\/nav><\/div>\n<p>&#8220;<strong># China turns up pace on CBDC release, tests infrastructure prior to adoption <\/strong>&#8221;<br \/>\n<img decoding=\"async\" src=\"https:\/\/images.cointelegraph.com\/images\/840_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjEtMDEvMDRhOTA0MWEtNTMwYi00YWE2LTlmNDItN2E4NTJiOGY3ZmQyLmpwZw==.jpg\" \/><\/p>\n<div class=\"post-content\" data-v-5a136f3a>The COVID-19 crisis has done little to dampen China\u2019s interest in becoming the first major economy to distribute a central bank digital currency. Quite the contrary, its digital currency\/electronic payment project <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>ears to be picking up speed.\u00a0<\/p>\n<p>In the Shenzhen region, for example, 100,000 local citizens this month received for free a total of $31 million digital yuan via lottery, and now residents can use ATMs to convert digital yuan to cash on a test basis. <\/p>\n<p>Meanwhile, the Postal Savings Bank of China has <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/baijiahao.baidu.com\/s?id=1688678531510988405&amp;wfr=spider&amp;for=pc\">reportedly<\/a> developed physical wallet cards on which to store digital yuan, something useful for the elderly who aren\u2019t always comfortable with electronic currency. The government, which seems to be covering all eventualities, recently enlisted payment-platform Alipay in the construction of digital yuan systems in the Shanghai area as well.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Why_all_the_rush\"><\/span>Why all the rush?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Kevin Desouza, professor of business, <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/technology\/\" data-internallinksmanager029f6b8e52c=\"4\" title=\"Technology\" target=\"_blank\" rel=\"noopener\">technology<\/a> and strategy at Queensland University of Technology, told Cointelegraph: \u201cChina is accelerating its pace of development of its CBDC. Simply put, they see this as a critical competitive advantage in the digital economy.\u201d Given the nature of China\u2019s markets and governance and its determination to gain a \u201cfirst-mover\u201d advantage in the CBDC race, \u201cwe can expect China to <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/trip-and-travel\/\" data-internallinksmanager029f6b8e52c=\"10\" title=\"Trip &amp; Travel\" target=\"_blank\" rel=\"noopener\">trip<\/a>le down on this effort going forward.\u201d<\/p>\n<p>Eswar Prasad, a professor of economics at Cornell University and senior fellow at the Brookings Institution, told Cointelegraph: \u201cChina has made significant progress in establishing and refining the design and conceptual frameworks for its CBDC\u201d and has brought \u201cthe shift from physical to digital versions of central bank retail money that much closer to reality.\u201d<\/p>\n<p>When fully rolled out, the digital yuan will be used as an M0 currency \u2014 i.e., as cash in circulation like coins and banknotes, <a rel=\"nofollow noopener\" target=\"_blank\" href=\"http:\/\/www.bjreview.com\/Business\/202012\/t20201229_800231205.html\">according<\/a> to an official of the Peoples Bank of China. The preparation has been extensive, with 2020 pilot tests in four regions \u2014 Shenzhen, Suzhou, Xiong\u2019an and Chengdu, plus the Winter Olympics scene \u2014 while the 2021 agenda calls for tests in five regions \u2014 Shanghai, Hainan, Changsha, Qingdao, Dalian and Xi\u2019an. There has been an emphasis on usability in these test areas, <a rel=\"nofollow noopener\" target=\"_blank\" href=\"http:\/\/www.bjreview.com\/Business\/202012\/t20201229_800231205.html\">according<\/a> to the Beijing Review.<\/p>\n<p>A key phrase from the report stated that \u201cboth mobile phones were offline.\u201d China\u2019s digital yuan will not require an internet connection, something viewed as critical in a land where many remote areas still have no or spotty internet access.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Challenges_like_interoperability_and_privacy_remain\"><\/span>Challenges like interoperability and privacy remain<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>China has not solved all the problems attached to a CBDC, though. \u201cThere are still important issues to be tackled in terms of scalability, interoperability and transactional privacy for users of the DC\/EP,\u201d as Prasad told Cointelegraph. <\/p>\n<p>Yu Xiong, international associate dean at Surrey University and chair of business analytics at Surrey Business School, told Cointelegraph: \u201cThere will still be some technical issues remaining before full rollout, however, the main issues have already been addressed in the test period.\u201d The matter of usability has been largely settled. <\/p>\n<p>Chinese consumers are flexible when it comes to applying new payment methods, and the digital yuan wallet is expected to be similar to those already being widely used in China on non-bank payment platforms like Alipay or WeChat Pay, explained Xiong. Users will download digital yuan wallets to their smartphones where the digital currency can be stored. \u201cAll the major online trade and communication platforms will follow, so the infrastructure will not be an issue,\u201d he added.<\/p>\n<p>Crucially, a user won\u2019t have to open a bank account to get started \u2014 just provide <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.thestar.com.my\/aseanplus\/aseanplus-news\/2020\/12\/28\/digital-yuan-parades-its-strengths-during-pilot-programme\">a unique form of identification<\/a>, like a driver\u2019s license or a cell phone number. A digital yuan would be an event of some <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/social-mediaa\/\" data-internallinksmanager029f6b8e52c=\"1\" title=\"Social Media\" target=\"_blank\" rel=\"noopener\">social<\/a> importance for China, suggested Xiong, because it could bring many poor people into the financial system and alleviate poverty. <\/p>\n<h2><span class=\"ez-toc-section\" id=\"Monetary_surveillance\"><\/span>Monetary surveillance<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Elsewhere, China is already mostly cashless, so a digital yuan isn\u2019t going to bring dramatic changes to the retail sector. But as for the reasons beyond social equity for why China is so committed to a digital yuan, Desouza told Cointelegraph: <\/p>\n<blockquote><p>\u201cThe reason for China\u2019s investment in this is to increase the credibility and universality of their currency. Today, the yuan is not seen as a major currency. However, in the future, they see the CBDC taking a leadership position in the digital currency market.\u201d <\/p><\/blockquote>\n<p>There\u2019s a practical reason, too. Desouza suggested that a CBDC would give the central bank an enhanced ability to surveil and control the flow of money between the citizens. Indeed, a digital yuan appears to be a double-edged sword. Enabling the government to track the money flow might be useful for clamping down on corruption, as Xiong noted, and would also \u201chelp the government to monitor the finance system and reduce the chance of a financial crisis.\u201d <\/p>\n<p>A digital yuan could reduce certain investment risks, for instance, when the government continued to build mammoth residential complexes in so-called \u201cghost\u201d cities \u2014 i.e., under-occupied developments. <\/p>\n<p>But perhaps these advantages come at the price of sacrificing privacy and even some basic freedoms. Political critics or dissenters could more easily be denied access to the finance system if all money flows can be tracked \u2014 as they could with a CBDC. <\/p>\n<p>During recent protests in Hong Kong, demonstrators waited in long lines to purchase subway tickets with cash \u2014 fearing that, otherwise, the authorities might trace them to the demonstration site and take punitive action, Marta Belcher, a Ropes &amp; Gray attorney, <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/fortune.com\/2020\/08\/10\/china-digital-currency-electronic-yuan-bitcoin-cryptocurrency\/\">told<\/a> Fortune<em> <\/em>magazine, adding: \u201cA cashless society is a surveillance society.\u201d<\/p>\n<p>Sidharth Sogani, CEO of crypto and blockchain research firm Crebaco, even sees a Bitcoin (BTC) aspect in China\u2019s drive toward a digital yuan. He believes that China has not taken to decentralized crypto, however, the software, hardware and mining industries were allowed to grow. \u201cCurrently, a majority of Bitcoin is mined in China \u2014 so I see an ulterior motive behind being aggressive with their CBDC. Maybe it would enable China to trade BTC more efficiently,\u201d he told Cointelegraph.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Can_it_be_replicated_elsewhere\"><\/span>Can it be replicated elsewhere?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>At this point, the PBoC has accumulated heaps of data about how consumers would actually use a digital currency. The central bank provided employees in a Shanghai hospital with the aforementioned plastic cards holding digital yuan to order meals in the staff restaurant, for example; and at the start of January, Alipay was testing the digital yuan in a Shanghai shopping center, placing signs in beverage shops where consumers could employ the usual Alipay scan code function \u2014 only here selecting a yuan pay option. Will other countries now draw on China\u2019s experience as they build their CBDCs?<\/p>\n<p>A DC\/EP-type project could be reproduced elsewhere, said Xiong, but it would take time to gain acceptance, as with mobile payments. China can adapt to the new payment method quickly because its banks and e-commerce platforms can be easily synchronized. As Xiong outlined for Cointelegraph:<\/p>\n<blockquote><p>\u201cBut most of the Western countries could not enforce a new policy\/technology smoothly. So, the DC\/EP model will be carried out first in China, and other countries will have to gradually grow the users and infrastructure, which will take time.\u201d<\/p><\/blockquote>\n<h2><span class=\"ez-toc-section\" id=\"Is_the_US_dithering\"><\/span>Is the U.S. dithering?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Does it really matter if China comes to market first among large economies with a digital currency? The Bahamas, a small West Indies nation, launched the first CBDC available to all residents in October \u2014 so China won\u2019t be the first country overall. \u201cIn CBDCs, it will have the first-mover advantage,\u201d said Sogani. \u201cIf a U.S. [digital] dollar comes after two years, they may lose the market.\u201d<\/p>\n<p>Others aren\u2019t so sure. \u201cIt will hardly put a dent in the dollar\u2019s status as the dominant global reserve currency,\u201d Prasad told Cointelegraph. \u201cThe dollar\u2019s strengths lie not just in the depth and liquidity of U.S. financial markets but also the institutional framework that underpins the currency\u2019s status as a safe haven.\u201d<\/p>\n<p>Neha Narula, director of the Digital Currency Initiative at MIT Media Lab, <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.americanbanker.com\/podcast\/a-fed-digital-currency-looks-inevitable-so-do-the-problems\">noted<\/a> in November: \u201cThey will be able to see all of the payments that people are making and collect information about all of those payments. That is \u2014 [it] might make sense in China. But I don\u2019t think that makes sense in the United States&#8230; And we have to think about how to architect the system so that isn\u2019t the case.\u201d<\/p>\n<p>In sum, even if China is already a mostly-cashless society, especially in its cities, it continues to methodically roll out a central bank digital currency on a scale not previously seen, both for internal reasons \u2014 like broader social equity and the ability to exert more financial and political control \u2014 but also because it realizes, arguably, that global leadership entails having a world-class currency and the DC\/EP project provides the fastest way to get there.<\/p>\n<\/div>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong>\n<\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/general\/\" target=\"_blank\" rel=\"noopener\">General category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/cointelegraph.com\/news\/china-turns-up-pace-on-cbdc-release-tests-infrastructure-prior-to-adoption\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;# China turns up pace on CBDC release, tests infrastructure prior to adoption &#8221; The COVID-19 crisis has done little to dampen China\u2019s interest in becoming the first major economy to distribute a central bank digital currency. Quite the contrary, its digital currency\/electronic payment project appears to be picking up speed.\u00a0 In the Shenzhen region,&#8230;<\/p>\n","protected":false},"author":1,"featured_media":156008,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/s3.cointelegraph.com\/uploads\/2021-01\/04a9041a-530b-4aa6-9f42-7a852b8f7fd2.jpg","fifu_image_alt":"","footnotes":""},"categories":[1],"tags":[74894,75046,75493,75057,74355,4973,4965],"class_list":["post-156007","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-blockchain","tag-cbdc","tag-stablecoin","tag-yuan","tag-adoption","tag-china","tag-technology"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/156007","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=156007"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/156007\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/156008"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=156007"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=156007"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=156007"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}