Come collect your free digital currency . . .
China began working on developing digital yuan currency in 2014, following the transition to promoting cashless payments. China has announced that it will hand out C$7.5 million digital yuan to Beijing residents in a lottery as part of a trial beginning in June. Until June 7, Beijing residents have the option of using the Bank of China or the Commercial Bank of China’s mobile apps to win one of 200,000 digital red envelopes with about C$38 digital yuan in each. The government plans to expand the trial to 10 cities or provinces in the hope of having foreign visitors use digital yuan at the 2022 Beijing Winter Olympics.
Differences between digital yuan and cryptocurrencies . . .
Digital yuan differs from cryptocurrency as it is a central bank digital currency (CBDC) issued by the Peoples’ Bank of China (PBOC), a central authority. One of the main attractions of cryptocurrencies like bitcoin is its decentralized network, which allows for anonymity in financial transactions. By controlling digital currency through a centralized network, experts believe it will lower financial risks and reduce speculative trading. With China’s adoption of cashless payments through WeChat and Alipay, the role of digital yuan could become popularized and co-exist with cryptocurrencies.
Canada’s role in central bank digital currency . . .
According to Bison Trails’ new report, about 80 per cent of central banks are exploring the potential to use digital currency in certain cases. However, the deputy governor from the Bank of Canada announced on May 26 that “[we] don’t see a strong case for issuing it (CBDC) but the world is progressing very rapidly.” Although Canada does not see a strong case for issuing CBDC, Canada may continue exploring options as the sector develops. In the meantime, Canada can observe how countries like China navigate the design and implementation of CBDC.