In the last couple of years, the Chinese government has made progress in curating its national digital currency. Looking at their progress, China will be the first to roll out its digital currency, the digital yuan. In addition, the Central Bank of China will roll out the digital yuan. But, the primary question people worldwide want is whether digital yuan can replace the physical yuan. Many experts believe that reality is much more complicated than it seems. Additionally, you can also start inversing the national cryptocurrency of China, the digital Yuan by visiting https://yuan-pay-group.net.
Challenges for digital yuan
Before we try to understand whether the digital yuan can replace the physical yuan, it is essential to know about the challenges faced by the digital yuan. The digital currency of China is facing challenges both at home and abroad. The Chinese government is undoubtedly a leader in digital currency, but it will still face economic and political challenges. Even after a decade of research and testing of digital currency for years, it is still being determined whether people will accept the digital yuan. In addition, the full-scale launch date of the digital yuan has yet to be precise.
State of digital payment market in China
Compared to other nations, the Chinese digital payment market is quite established. The best part about China’s digital payment market is that private players have been working for over a decade. Therefore, there are minute challenges in terms of the infrastructural requirement. The payment system by Alipay is a dominant player in the Chinese online payment market. They own 50% of the market. On the other hand, WeChat Pay owns 40% of the market. Thus, most of the market is already owned by private players.
Challenges for government-owned digital yuan
The biggest challenge the Chinese government faces in rolling out the digital yuan is widespread awareness about the digital currency offered by private players like Alipay and WeChat Pay. The next major challenge is that the technology behind the Chinese government’s digital yuan is far more technologically inferior than the alternatives offered by private players. There are also technical questions that the Chinese government still needs answers to. For example, the government needs to find out who will be liable for the e-CNY claim and how the commercial bank will be an active player in the system.
The next major challenge for the digital Yuan in China is its awareness and encouragement to use. When you look at official data, there are more than 261 million e-CNY wallets, and the number keeps increasing. But most of these wallets are empty and have no active users. In addition, a few researches have also revealed that ordinary Chinese people are not interested in switching to a new system as they are comfortable with the service private players offer. Furthermore, the Public also believed there needs to be more clarity about the privacy issues surrounding the digital yuan.
If the digital yuan cannot establish itself in the domestic market, how will it cement itself in the international payment system? Thus, looking at the current situation, the digital yuan won’t be able to replace the traditional currency. Western countries will only accept the system developed by China when it comes to international acceptance.
Current situation of the digital yuan in the International market
Many concerns related to the digital yuan were borne out in the Winter Olympics trial run. The trial was successful, but it came up with poor publicity. In the Winter Olympics 2022, digital currency was also made available for foreigners. However, since there was poor publicity, most visitors have never heard of the digital yuan. Undoubtedly, Chinese citizens are aware of the digital yuan, but there needs to be more international trust in the digital yuan.
Bottomline
As far as the replacement of the yuan by digital yuan is concerned, it isn’t possible now. The digital yuan is just a baby now. It needs a big launch and a good plan for rollout. The currency needs to answer all the Public’s questions on a technical level. In addition, the baby Digital Yuan also needs to be protected from the lousy mud coming from the political front.
