Digital Yuan is Here

Implications remain to be broadly tested.   Details and underlyng security is of interest. 

China Creates Its Own Digital Currency, a First for Major EconomyA cyber yuan stands to give Beijing power to track spending in real time, plus money that isn’t linked to the dollar-dominated global financial system

By James T. Areddy in the WSJ

A thousand years ago, when money meant coins, China invented paper currency. Now the Chinese government is minting cash digitally, in a re-imagination of money that could shake a pillar of American power.

It might seem money is already virtual, as credit cards and payment apps such as Apple Pay in the U.S. and WeChat in China eliminate the need for bills or coins. But those are just ways to move money electronically. China is turning legal tender itself into computer code.

Cryptocurrencies such as bitcoin have foreshadowed a potential digital future for money, though they exist outside the traditional global financial system and aren’t legal tender like cash issued by governments.  .... " 

See also Coindesk's informative ongoing section on the Digital Yuan.

China Moves ahead to Digital Currency

China Charges Ahead with National Digital Currency   By The New York Times  March 4, 2021

China has charged ahead with a bold effort to remake the way that government-backed money works, rolling out its own digital currency with different qualities than cash or digital deposits.

China is forging ahead with a national digital currency called the electronic Chinese yuan (eCNY), with government presentations indicating the People's Bank of China recently expanded trials of the currency to major cities like Beijing and Shanghai.

Unlike decentralized cryptocurrencies such as bitcoin, national digital currencies are firmly controlled by the government.

People's Bank officials said the eCNY does not use the blockchain technology that most cryptocurrencies rely on, and recipients have only a few weeks to spend the digital currency before it disappears.

The eCNY could further empower China's government to monitor finance channels because a digital currency system can record all transactions.

Yaya Fanusie at the nonprofit Foundation for Defense of Democracy's Center on Economic and Financial Power think tank said China's initiative is "about developing new tools to collect data and leverage that data so that the Chinese economy is more intelligent and based on real-time information."

From The New York Times

China Charges Ahead with National Digital Currency

Implications of these changes for US and Others? 

China Charges Ahead with National Digital Currency  By The New York Times,  March 4, 2021

China has charged ahead with a bold effort to remake the way that government-backed money works, rolling out its own digital currency with different qualities than cash or digital deposits.

China is forging ahead with a national digital currency called the electronic Chinese yuan (eCNY), with government presentations indicating the People's Bank of China recently expanded trials of the currency to major cities like Beijing and Shanghai.  Unlike decentralized cryptocurrencies such as bitcoin, national digital currencies are firmly controlled by the government.

People's Bank officials said the eCNY does not use the blockchain technology that most cryptocurrencies rely on, and recipients have only a few weeks to spend the digital currency before it disappears. ... '   The eCNY could further empower China's government to monitor finance channels because a digital currency system can record all transactions.

Yaya Fanusie at the nonprofit Foundation for Defense of Democracy's Center on Economic and Financial Power think tank said China's initiative is "about developing new tools to collect data and leverage that data so that the Chinese economy is more intelligent and based on real-time information."

From The New York Times

Towards a Digital Euro

More experiments in the space.  

Why is the ECB eyeing a 'digital euro'?  by Florian Cazeresin Techxplore

A digital euro would complement, not replace cash

The European Central Bank will on Monday launch a public consultation and start experiments to help it decide whether to create a "digital euro" for the 19-nation currency club. The move comes as the pandemic accelerates a shift away from cash, and as policymakers nervously eye the rise of private cryptocurrencies like Bitcoin.

Here's an explainer of what a "digital euro" would mean for the region's citizens.

What is a digital euro? A digital, or virtual, euro would be an electronic version of euro notes and coins, it would be legal tender and guaranteed by the European Central Bank. .... ' 

Entering the Era of Private Money?

Short podcast that just starts to position the question, and many implications.

Sorry, Governments, We’re Entering the Era of Private Money

Whether the U.S. government likes it or not, the world is demanding crypto-dollars and the private market is ready to supply them.  ....

Podcast

By Nathaniel Wittemore   In Coindesk  

For more episodes and free early access before our regular 3 p.m. Eastern time releases, subscribe with Apple Podcasts, Spotify, Pocketcasts, Google Podcasts, Castbox, Stitcher, RadioPublica, iHeartRadio or RSS.... '

China Tests Digital Currency

Continued moves by China to integrate this technology.

China Rolls Out Pilot Test of Digital Currency
The Wall Street Journal
Jonathan Cheng; Grace Zhu

The People's Bank of China has rolled out a digital currency across four cities—Shenzhen, Suzhou, Chengdu, and Xiong'an—in a pilot program. The cryptocurrency, presently designated digital currency/electronic payment (DC/EP), has features in common with bitcoin and Facebook's Libra cryptocurrency. China's central bankers said DC/EP is designed to replace some of the country's cash in circulation, while bank deposits and balances held by privately run payment platforms will remain intact. The government instructed civil servants in Suzhou's Xiangcheng district to begin installing an app on their smartphones this month into which the cryptocurrency would be transferred, covering half their transport subsidy. China's central bank has said transitioning to a government-run digital payment system will help counter money laundering, gambling, and terror financing, and improve the transaction efficiency of China’s financial system. ... " 

Digital Bank of England banknotes?

Some indication that major countries are considering/testing possible implementations.

Is this the digital future for Bank of England banknotes?    By Kevin Peachey in the BBC

Personal finance reporter
The Bank of England is considering the introduction of electronic banknotes for use by consumers and businesses.

Governor Mark Carney said: "We are in the middle of a revolution in payments," saying the Bank must look into how electronic money could work.

He said this would complement, not replace, paper banknotes while people still wanted physical cash.

But it could open the door to programmable money to integrate with home appliances or the tax system.   .... " 

China Digital Currency and Virus

Origin of this comments makes this interesting, a means of regulating otherwise hard to control financial results coming from less controllable events like epidemics?

Coronavirus outbreak could accelerate China's digital currency issuance, says former central bank president    by Celia Wan  in TheBlock

Efforts to combat the coronavirus could accelerate the Chinese central bank's plans to issue a digital currency, according to a former president of the People's Bank of China.

In a February 16 interview with China Daily, Lihui Li argued that a digital currency's efficiency, cost-effectiveness, and convenience make it especially desirable during an epidemic. Li previously helmed the People's Bank of China and now serves as the blockchain lead for the state-run National Internet Finance Association. .... " 

China Ready to Launch Its Digital Renminbi

World wide implications?

Technology Review:   Chain Letter: MIT Technology Review
Blockchains, cryptocurrencies, and why they matter

12.12.19
Chain Letter from MIT Technology Review
#174: The next steps in China’s digital currency road map have been revealed

China may be just about to launch its digital renminbi in two cities. The People’s Bank of China is planning a real-world pilot of its digital currency, the first phase of which could begin before the end of this year, according to a report from an influential Chinese financial news publication. That would support recent speculation that China is on the verge of becoming the first major economy to issue sovereign digital money.

In August, an official from the PBOC said the currency, which China has been developing for several years, was “close” to being issued. The new report, from the financial news outlet Caijing, outlines specific next steps. It says the PBOC could launch a small-scale experiment in Shenzhen before the end of the year and then scale it up in 2020. In addition to Shenzhen, the pilot will take place in the eastern city of Suzhou, according to Caijing. If the tests go well, presumably the currency will go live soon afterward.

The Caijing report seems to confirm several details about the forthcoming currency system, called digital currency electronic payment (DCEP), that have appeared in news reports during the past several months. For instance, it confirms that the PBOC will partner with commercial banks to issue the currency, and that during the initial phase the banks will compete on how best to implement it. It says tests will likely include seven state-owned firms: the four largest commercial banks and three big telecom companies. According to the news report, the tests will involve real-world service scenarios in the areas of transportation, education, and medical treatment.  .... "   Full report.