Coronavirus pandemic causes many economic challenges. Due to these challenges, the urgency for Chinese companies to adapt to a digital currency has increased.
Digital Currency Electronic Payment
China’s sovereign digital currency, also known as the Digital Currency Electronic Payment. The People’s Bank of China planned to release the e-yuan before the start of the Winter Olympics.
So far, pilot programmes have been rolled out in the Chinese cities. For instance, these cities include Shenzhen, Suzhou, Xiongan and Chengdu. Digital red packets have even given out during holidays and special occasions for the consumers to spend at retail shops and restaurants.
Advantage of the digital currency system
According to Guo Weimin, chief scientist at the Bank of China, here are some key advantage of the e-yuan system. It can trace cash flow and ease the process of enforcing financial regulations.
Uses of digital currency amid the pandemic
The pandemic created issues surrounding the collection of debt and collateral by businesses that are struggling to survive. However, with the uses of the e-yuan system, it can provide closer scrutiny of payments.
Besides, it can also monitor risky investments in the property market that did not fit the original plan of a project.
“[Regulatory capacity and traceability] should be the key focus given the current economic situation, as this has become rather urgent,” Guo said. “There will be a lot of challenges from the pandemic that will make good cases for the use of digital currencies.”
Future development of the digital currency
The future development of this currency would shift away from its focus on consumer use to business and government applications.
“The corporate side is much more important because it would involve the digitalisation of corporate assets and financial digitalisation,” Zhou said. Zhou is the chairman of Zhejiang Modern Digital Finance Research Institute. “This makes digital currencies different from just digital payments.”
China has already established digital payment platforms like Alipay and WeChat Pay. Therefore, in the second phase of experimentation, the uses of this currency will be expanded beyond the domestic market to cross-border payments.
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