In 2021 China’s State Administration of Foreign Exchange (SAFE), with the help of PBOC, officially established a CBDC cryptocurrency for trading with the international community. The bitcoincode Official Site will assist traders in their bitcoin journey with the best trading tools, fast payouts, and phenomenal customer support. This elusive currency is about to revolutionize how China does business on a global scale. This post will explore the possible implications of this initiative and what it means for the future of commerce in China and beyond.
There are many questions left unanswered to date, so this blog post will try to answer some of those inquiries that people raised. People might also explore the role of identity theft through hackers’ perspectives and what steps can be taken to prevent this if you’re considering CBDC as an investment strategy. Finally, there is a lot of speculation about digital currency from people who have little or no knowledge of the subject but are very supportive of the initiative for several reasons.
Why did the PBOC introduce e-CNY?
The purpose is to facilitate international trade and improve the efficiency of cross-border transactions. In addition, China’s central bank has always sought to support the ongoing integration of its economy into the world economy, which requires joint efforts from all players in the global financial system.
By creating this new digital currency, it is hoped that more people will be able to participate in international trade regardless of where they are located. It will also eliminate any foreign exchange transaction costs between countries. It should be interesting to see how this new currency will affect cross-border payments, international trade, and the remittance market.
The PBOC’s decision to develop a CBDC was a response to the rapid growth of e-commerce in China and the increasing number of Chinese businesses looking for retailers in other countries that accept their payment methods. The CBDC could also create a level playing field for people who want to use digital currency to conduct international business, like those who cannot because they need an account with a foreign bank or credit card company.
Implications: What will happen with the e-CNY roll-out?
The following are some of the predicted implications for this initiative:
- More Chinese companies will be able to trade internationally without converting their money into existing currencies. E-CNY is expected to make it easier for them to pay for goods and services from overseas suppliers as e-CNY is already a widely accepted payment method in China;
Based on the current trend, China could also create a Euro equivalent or other fiat currencies that are used globally, such as the US dollar, British pound, or Japanese yen.
- Official recognition and acceptance of China’s digital currency by the international community, businesses, and governments worldwide. China attempted to build an international payment network for the digital e-CNY to make and receive international payments in real time via mobile phone.
- Allow China to bypass the US dollar as a currency of choice for international business and eventually pave the way towards a cashless society. Evidence shows that China is already following this trend and is planning on building a universal payment system that will connect all mobile phone users’ bank accounts and allow direct transfers between people’s bank accounts. However, it remains to be seen how well things go in practice because many international businesses still rely on US dollars, given that they have yet to gain experience with CBDC technology.
- The launch of e-CNY will likely trigger more demand for gold as an alternative investment to secure future wealth. China has been aggressively discouraging its citizens from investing in the stock market, and gold has become the one stable asset to hold on to. Introducing a digital currency will undoubtedly lead to more demand for gold. There are reports that bitcoin might beat out gold as a safe-haven investment due to its breakeven point in less than three years.
The government’s investment in CBDC warns international investors not to invest in this new digital currency. The introduction of e-CNY could threaten US dollar dominance, but it might also end up strengthening it, depending on how things evolve in practice over time.
The Chinese government is skeptical of bitcoin and digital currencies as they often tend to get involved in money laundering. In addition, the Chinese government was working on cracking down on any activities related to cryptocurrency, like ICOs in China due to investor scams, funds mismanagement, and Ponzi schemes that have been associated with illegal pyramid schemes across China, and recently, china altogether banned all the privately mined cryptocurrencies.
The cautious attitude towards cryptocurrency could be attributed to the fact that some people have lost a lot of money through bitcoin speculation in previous years. It remains to be seen how the new digital currency will affect the crypto market and how regulators will treat it like the US Government or other governments worldwide.