Central Bank Digital Currencies is the latest technology most countries are chasing right now. However, it looks like China is the only one that has it figured out. The Chinese digital Yuan is taking off at a fast pace as it sees increased adoption and spending despite COVID-19. In the past 1 year, the usage of digital Yuan has increased 18 times. This is unlike any other country that is still in the development or pilot phases of its CBDCs.
The rapid growth of the Chinese digital Yuan
China is still rolling out its digital Yuan in selected cities as the pilot phase is currently on. Reports from the People’s Bank of China say that the transaction volumes reached $13 billion last year, and there are over 261 million wallets in the pilot areas. A lot of people are also using the digital Yuan to pay for only goods and services online. JD.com reported a total of $60 million paid for using these wallets. All this is happening despite the pandemic affecting the economy of the country.
China’s digital Yuan is also being used to pay for housing deposits and wealth management products. There was a report that a user paid for their vehicle’s insurance with digital Yuan. Loans are also being issued using China’s CBDCs pushing adoption to new heights.
China’s simple yet effective strategy
The country has made it easy to pay for goods and services with the digital Yuan, which has reduced the friction in adoption. Users can pay at over 15000 merchant stores using the central bank digital currency. The authorities have also planned airdrops to incentivize its adoption and more spending. A while back, they announced that 30 million digital Yuan would be gifted to users using online and offline lottery systems and partnered with banks to make it happen.
The US restricts the use of China’s CBDC
Mike Braun, Marco Rubio, and Tom Braud recently introduced a bill called “Defending Americans against Authoritarian Digital Currencies.” The bill restricts the use of Chinese digital Yuan in the United States. They have asked Google and Apple to ban any apps on their platform that allows users to use them. Mike explained this decision by saying that China has direct control and surveillance over the financial lives of its citizens. This cannot be allowed to happen in the United States. He also added that the use of the digital Yuan would allow China to infiltrate the US’s economy.
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