NEWS UPDATE – CHINA CREATES ITS OWN DIGITAL CURRENCY
By: Nneka Oduada Eze Esq.
INTRODUCTION
The Chinese economy, which is one of the most powerful and well advanced economies in the world, is in the forefront of cashless policy payments. With the vantage positioning in the field of science and technology, China is now taking concrete steps to turn its bank notes and coins (legal tenders) into a computer code called the DIGITAL YUAN.
WHAT IS DIGITAL YUAN ALL ABOUT?
The Digital Yuan or Digital Currency Electronic Payment (DCEP) is the Chinese version of an electronic money or cyber cash. The ideology behind this novel initiative is the drive to jettison the traditional bank notes and coins for a digitalized currency and situating the Chinese economy to a viable alternative in global trade and commerce. The proposal for a Chinese digital currency was mooted in 2014 by the Peoples Bank of China (PBOC) and is expected to be in full circulation in China and to subsequently gain recognition and acceptance in the global market.
REASONS FOR THE INTRODUCTION OF THE DIGITAL YUAN
Some reasons have been advocated as basis for the digitalizing of the Chinese currencies, such as high cost of production and storage of the bank notes and coins, particularly, when they are worn-out. The whole process of destroying and re-making new currencies is heading towards the age of being outdated, especially with the level of technological advancement in place.
BRIDGING THE GAP IN THE FINANCIAL SECTOR
The digital Yuan, with its innovative features seeks to bridge yearning gaps in the traditional financial sector. In this era where cybercrime has sadly retained an evolving form of transnational crime and global concern, it is believed that the proposed implementation of the Digital Yuan will not only give the Chinese policy makers a great visibility into the inflow of money within China, it will also help in tracking illicit flow of funds within the space.
THE FUTURE IS DIGITAL
China has indeed taken a major flip into the future ahead of other countries. There is no doubt that within the shortest time, other countries will key into this tremendous idea of digitizing their currencies to reap the consequent benefits of ease of cross border and global trade. Since the future is technologically inclined, one will not be too surprised if paper notes (legal tenders) are put into a state of permanent abeyance.