A whitepaper on digital yuan has been published by the People’s Bank of China. A desire to “explain” the objectives, background, and vision of the project. The Central Bank stated in documents that the main reason for creating the state-backed currency was to address the challenges presented by crypto.
It is important to note that at the same moment, the central bank has again criticized decentralized crypto assets like bitcoin (BTC), claiming that these have no internal value and are unstable and that they require “enormous amounts of energy consumption.”
The launch of a state-backed cryptocurrency has been a goal of the Central Bank of China since last year. The government is also cracking down against cryptocurrency-related businesses. Due to the harsh environment in which crypto businesses operate, many cryptocurrency miners were forced to leave the country just weeks ago.
The digital yuan, and its real use in the economy
According to the PBoC, the digital yuan has been used in more than 1.3 million transactions since its pilot. This includes payments for utility bills, catering services, transport, shops, and public service fees.
More than 20.87 million personal portfolios and more than 3.51 million corporate portfolios were opened, with a transaction volume of 70.75 million and a transaction value close to RMB34.5 billion [$5.3 billion]– reported the bank.
The main points of E-yuan are described as follows:
- The central bank issues it as a fiat currency. The physical form of the Yuan is also used.
- This is a retail version of CBDC that is issued to the public. It serves mainly national retail payment requirements.
- The State has the right to issue an eyuan, with the PBoC at its center. However, authorized operators and commercial institutions can exchange and distribute the eyuan to members of the public.
- It is intended to be used as a replacement for cash in circulation. The physical Yuan will continue to exist as long as cash is needed. The central bank will not stop delivering cash to the market or replacing it with administrative orders.
- E-yuan charges only authorized operators to exchange currency. Individual customers are not charged for exchange services.
Crypto companies are leaving China
CryptoTvplus reported on June 1st that China’s crackdown led to the shutting down of the first Chinese cryptocurrency exchange, BTCC. The company claimed that it had “completely left bitcoin-related companies” and that its stakes in ZG, Singapore-registered, have been sold to an undisclosed Dubai-based foundation.
According to the Governor of the Central Bank, there are two types of CBDC. The retail CBDC will be sold to the public, while wholesale CBDC will be used for large settlements by commercial banks.