Xin Jinping

China begins major trial of its digital Currency e-RMB

Reading Time: 3 minutes


By Amaka Obi

Amid the COVID 19 backlash, China has gone on to test state run digital currency to counter the Dollar monopoly.  In major cities, China’s central Bank has reportedly began trials of the e-RMB. It is the first digital currency operated by a major economy. The four cities currently undergoing the trials are Shenzhen, Chengdu, Suzhou, Xiong’an a new south of Beijing as well as areas that will host some of the events for the 2022 Beijing Winter Olympics. It has been formally adopted into the cities’ monetary systems, reported state media outlet China Daily, but the official date for its roll out has not yet been released but some local report claim mid 2021

As reported by The Guardian, Some government employees and public servants will receive their April salary in the digital money, the e-RMB. The country also plans to use the digital money to subsidize transport in Suzhou, but in Xiong’an it will be used mainly for food and retail,

Some sources claim that top businesses including the likes of McDonald’s and Starbucks have accepted to be part of the digital money trial, but as reported by the Guardian, Starbucks told the news center that it was not a party to the trial. China already has in use digital payment platforms namely Alipay, owned by Alibaba’s Ant Financial, and WeChat Pay, owned by Tencent, but the Digital money will not replace the existing currency and platform usage.

Xu Yuan, associate professor at Peking University’s national development research institute, told broadcaster CCTV, “Although there is little change from the perspective of user use, from the perspective of central bank supervision, future forms of finance, payment, business and social governance etc, this is the biggest thing ever.” 

The introduction of the new monetary system is perceived as China’s move to counter the dollar and to provide investors and businesses with an alternative to dollar payments. Many countries have already put China on the receiving end as it was the starting point for the emergence of the novel coronavirus a world health pandemic that has infected more than 3 million people worldwide and threatened the economic sector around the world. 

Another opinion piece from China Daily states that “A sovereign digital currency provides a functional alternative to the dollar settlement system and blunts the impact of any sanctions or threats of exclusion both at a country and company level. It may also facilitate integration into globally traded currency markets with a reduced risk of politically inspired disruption. The stability of the Chinese yuan during the COVID-19 crisis has enhanced its appeal to many investors. These two settlement systems–US dollar and China sovereign digital-may operate side by side or if need be, on a mutually exclusive basis,”

RMB vs the Dollar
The Dollar & The RMB
It has been stated that the People’s Bank of China (PBOC) will be the only issuer of the digital yuan, and to begin offering it to commercial banks and other operators. An official told theChina Daily that the public will also has access to it and be able to convert their paper money to the digital version and make deposits via electronic wallets. It is also reported that the technology allows the digital currency to be exchanged without the need for internet connection.



Leave a Reply

Your email address will not be published.