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The Digital Currency Electronic Payment (DC/EP) is a digital version of the yuan – China's national currency.
DC/EP, was first introduced in Shenzhen, 8th of October 2020, when government issued 10-million-yuan worth of digital currency to 50,000 randomly selected residents who applied. It was awarded in the form of “red packets” (红包) each containing 200 yuan that could be spent in designated shops.
The money can be transferred from the bank accounts to the digital version. It can also be distributed and used through the specific app, or transferred to widely used mobile wallets such as WeChat or Alipay (which combined, make 94 per cent share of the country’s mobile payments industry).
According to Mu Changchun, the head of the People's Bank of China's digital currency research institute, the digital RMB differs from WeChat Pay and Alipay: “They don’t belong to the same dimension. WeChat and Alipay are wallets, while the digital RMB is the money in the wallet.”
Mu underlined the “centralized supervision” from the central bank, creating a clear distinction between the digital yuan and cryptocurrencies like bitcoin, which run on a decentralized block chain over a peer-to-peer network. He added that PBOC (People’s Bank of China) is not looking at just one technical approach to managing its new digital currency, suggesting block chain could be one of its tools.
Another difference between a standard cryptocurrency and the digital yuan is anonymity. The former is anonymous, in varying degrees depending on the coin, while the latter is not. The government will be able to track the currency moving through its economy and monitor its usage.
One of the main advantages of the new digital yuan is that it will be available to people without a bank account. That will make it convenient to use by the short-term foreign visitors, help China bring the part of the population that does not keep their money in the bank into the mainstream economy and accelerate the move to a cashless society.
Source: www.investopedia.com, JobTubeDaily, ExpatFocus
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