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The Chinese central bank is an important competitor in this race to creation of a functional CBDC. In fact, it would be the third country worldwide to roll out testing after Sweden and South Korea.
Facebook sparks a race for Central Banks
This subject became very important and sensitive for countries and their sovereignty when Facebook announced project Libra. Having access to billions of customers worldwide, Facebook would (in theory) have the ability to roll out a currency to be used by the majority of the world population just like United States has done with the US dollar.
China vs US
Unfortunately, that is not an option for the up-and-coming Chinese economy that has become the second largest economy in the world and eyeing to become the first. One of the elements helping the US maintain its place is that its currency, printed in-house, is the world reserve currency. Allowing them to place sanctions on any country as they see fit.
By rolling out a successful digital currency in the shortest amount of time, the country that does so would have the first movers’ advantage for a new world currency.
DC/EP
The Digital Currency Electronic Payment (DC/EP) is the blockchain-based currency issued by China pegged 1:1 to the Renminbi (RMB). The following images are a preview of the upcoming interface shared by Ling Zhang, Executive Director, M&A Investment and Global Fiat at Binance where she also explained that the testing will roll out in four cities only at the start.
Seems that testing wallet app is available for download. 4 cities will be available for the trial to begin with, including Shenzhen, Chengdu, Suzhou and Xiongan. Interesting that Xiongan, the newly state-level new area is one the first batch of the trails cities. #DC/EP pic.twitter.com/960poROFIo
— Ling Zhang (@lingzh1220) April 14, 2020
Effect on traditional cryptocurrencies
As mentioned in previous articles, it is important to note that these are simply digital versions of existing fiat currencies. With that being said, the effect that can ripple into crypto-assets is raised awareness as well as education which is required for an increase in demand and new capital flows.
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