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How will China’s digital currency impact people’s lives?

(People's Daily Online)    14:24, September 03, 2020

China’s digital currency is undergoing internal closed pilot tests in several Chinese cities and will be tested in scenarios at the 2022 Winter Olympic Games in Beijing, according to the Monetary Policy Department under the People’s Bank of China (PBOC), the country’s central bank, on Aug. 25.

People pay their medical fees through self-service machines in the People’s Hospital of Wuxing district, Huzhou, east China’s Zhejiang province. (Photo/Xinhua)

The tests in Shenzhen in south China’s Guangdong province, Chengdu in southwest China’s Sichuan province, Suzhou in east China’s Jiangsu province and Xiongan in north China’s Hebei province aim to check the theoretical reliability, system stability, convenience, applicability and risk controllability of the digital currency.

“Its functional attributes are exactly the same as paper money, only in digital form,” said Mu Changchun, head of the PBOC digital currency research institute, adding that the digital currency is the electronic version of the country’s currency renminbi, also known as the yuan.

PBOC governor Yi Gang said earlier that the central bank will come up with a package plan to integrate digital currency and electronic payment tools so as to substitute a portion of cash.

The digital currency aims to be the equivalent substitution of the paper currency in circulation, rather than replacing all of it, according to Mu.

If a user’s mobile phone has a wallet, the digital currency can be transferred to another person without a bank account, a mobile or internet network by placing the two phones in physical contact.

“It is different from current digital payment methods such as Alipay and WeChat Pay, but for users, they are almost the same,” said Zhao Xijun, vice director of the School of Finance at Renmin University.

The internal closed pilot tests will not impact the business operations of listed institutions, or the issuance and circulation systems of the yuan, or financial markets, society and economy outside the test environment, the PBOC digital currency research institute said earlier.

The R&D and application of the legal digital currency will help meet public demand for legal currency in the digital economy, and improve the convenience, security and anti-counterfeiting level of retail payments, Yi said, adding that the digital currency will also boost China’s digital economy.

The application of the digital currency will definitely have some effects on economic activities. For example, virtual products in electronic games may become digital assets in the future, which will generate related trading platforms, Zhao noted, adding that the recording, storage, and purchase of songs may all be further digitized.

Although China’s central bank emphasized that there is no timetable for the launch of its digital currency, many people are looking forward to using it with the Winter Olympic Games approaching.

(For the latest China news, Please follow People's Daily on Twitter and Facebook)(Web editor: Hongyu, Bianji)

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