People’s Bank of China (PBoC) Testing Digital Yuan (DCEP) for Credit Card Payments

China has been aggressively developing its central bank-issued digital currency (CBDC), popularly known as digital yuan. As per the latest reports, the People’s Bank of China is currently running a pilot project to test the use cases of its digital yuan for card payments, fees, credit card payments, and more.

China has been at the forefront of developing a national digital currency called DCEP. The government authorized the research for the project more than five years ago, and many people were speculating for an official launch by September last year. However, digital yuan was eventually made public at the start of 2020, and the PBOC jas been testing various use case for the digital currency ever since.

The first pilot program for DCEP saw it being used as a travel subsidy for government employees in 4 cities. Later the pilot program was expanded to several universal fast food and beverage companies operating in China, which included Starbucks and McDonald’s as well.

Chinese Central Bank Tests Final Use Case for DCEP

As per a report published in the local daily 8BTC, the PBOC is currently testing digital yuans use a case in the credit card ecosystem as it could be a key to bringing in more customers. The trials in the credit card domain are also being seen as the final trial before the much anticipated public launch.

The central bank also revealed three new pilot-free trade zones (FTZ), in addition to the one already functioning in the Zhejiang province. These free trade zones are key to China’s dream of becoming a blockchain hub for enterprises.

The central bank of China also announced three large innovation trial projects, namely the National Small and Micro Enterprise Digital Credit Reporting Pilot, Digital Currency, and Financial Technology Innovation supervision.

While most of the countries have shown interest in researching and developing their own national digital currency (besides Australia), China managed to complete the research and development of its national yuan quietly and is slated to become the first country to launch its own digital currency. It is also important to note that while the national yuan project is being propagated as one of the true CBDCs, but many have warned that digital yuan would not work on a decentralized blockchain. Rather it is a sophisticated way for the government to control the flow of money outside the country.

Whether the project turns out to be what many are speculating, it would be interesting to see how digital currency is rolled out for the world’s most populated country.

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Author: Rebecca Asseh

Top UN Blockchain Expert Believes Digital Currencies And CBDC’s Pose a Threat To Bank Accounts

  • Top U.N. official says digital assets, particularly central bank-issued digital payment systems may soon replace bank accounts due to the low-interest rates.

Massimo Buonomo, a United Nations global blockchain and fintech expert, said the rising development of CBDCs and the low interest (negative) rates offered in commercial bank accounts may act as a catalyst to make corporate bank accounts obsolete.

The corporate banking system deficiencies are getting exemplified over the years and the monopoly on digital payments finally being challenged by cryptocurrencies, opening a way to the extinction of bank accounts, Buonomo explained.

In another interview on City AM this Thursday, Buonomo urged the need for adoption of cryptocurrencies and blockchain technologies to combat the global COVID-19 pandemic and the state of the current Bitcoin market.

Massimo sees the exponential growth of digital currencies development killing off the need for bank accounts completely. The global monetary system does not give any signal of getting better any time soon either. For instance, the Federal Reserve chairman, Jerome Powell, called for more financial stimulus in the economy, and Trump called for a possible extension of negative interest rates.

‘CBDCs over public blockchains’

While Massimo remains a big fan of public blockchains such as BTC and ETH, he believes the implementation of a central bank based is more suitable to be used as a national currency. The scalability and congestion issues combined with the technological limitations on the legacy blockchain systems still hinder mass adoption hence the call for the central bank to step in.

Research published by the Philadelphia Fed Reserve on June 1, shared the opinion that the development of a CBDC may replace the role of commercial banks. The proposed implementation of a digital USD by the Digital Dollar Foundation, the ECB’s plans of a retail CBDC, and China’s accelerated efforts on launching a digital Yuan all culminate in a possible commercial bank death spiral as the middleman.

U.N. takes on cryptocurrency and blockchain development

United Nations has taken a keen interest in blockchain technology and cryptocurrency implementation over the past few years. The World Food Program has run tests of a blockchain food distribution system in African countries to ease the refugee aid process.

In October 2019, UNICEF opened up a donation website accepting Ethereum, ETH Foundation donating 100 ETH (~$20,000 at the time). UNICEF also opened up tests on blockchain projects in different fields – providing internet to Kyrgyzstan schools, a bounty token system, and extensive donations to blockchain projects.

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Author: Lujan Odera