China’s central bank has announced the launch of a pilot version of a wallet app for its central bank digital currency called the e-yuan. The wallet app is available on Android app stores and on Apple’s App Store. The motive behind this is to increase the usage of the central bank digital currency.
The e-Yuan is the digital version of the country’s currency. It was first mentioned in 2014 and since then has been in development. Central Bank Digital Currencies (CBDCs) are slowly but gradually taking up a place in today’s financial world. They are governments’ replacements for cryptocurrencies which are banned in many countries across the world.
As the name implies, central bank digital currencies are owned, issued and controlled by a country’s central bank. They are digital, virtual or electronic versions of a country’s currency. In other words, they are digital, electronic or virtual representations of a country’s national currency. Central bank digital currencies, according to Wikipedia, was directly inspired by cryptocurrencies – Bitcoin, which is the world’s most used cryptocurrency, to be exact. What this, therefore, means indirectly, is that a central bank digital currencies can be seen as or compared with cryptocurrencies only that they are issued and regulated by a country’s apex bank. Another interesting thing about central bank digital currencies is that they are, like fiat money, backed by a country’s reserves unlike cryptocurrencies which have been criticized for being based on “thin air”. According to some schools of thought, central bank digital currencies are the attempt of governments to provide digital currencies while being able to regulate and control them. Some others see it as governments’ attempt to replace cryptocurrencies which they have largely turned their backs on because they cannot be easily controlled or regulated.
China has had many attempts at increasing the usage of the digital currency. The country has done a number of trials around the country in the form of lotteries where users are given small amounts of the currency to spend. Some retailers like JD.com have also begun to accept the digital currency.
For now, only users in ten areas including Shanghai and Beijing are can use the app. Users could only previously access the app on an invitation-only basis. The app can now be downloaded by anyone as the country seeks to widen the adoption of the currency.
According to a notice on the app, the “Beijing Winter Olympic areas” is one of the places the e-yuan can be used. The Winter Olympics, which takes place this year in the Chinese capital, has been one of the events that the People’s Bank of China has been targeting bringing the e-yuan to.
It is pertinent to know that the central bank digital currency of China has not been officially rolled out and there is no suggestion as to when an official rollout should be expected.