February 21, 2024

The digital yuan will be different from all other forms of stablecoins and cryptocurrencies

The digital yuan will be different from all other forms of stablecoins and cryptocurrencies

The head of the cryptocurrency division of the People's Bank of China, Changchun Mu, said thatThe digital yuan is different from bitcoin or stablecoins, and it does not need fiat to provide value.

According to him, the digital yuan is intended formaking payments, not speculation. However, Changchun Mu did not talk about how the NBK plans to link the value of the national digital currency to the traditional renminbi.

Chinese officials are just beginning to revealtechnical details of the future CDBC. Mu recently stated that the developers have almost completed work on the project and will soon begin testing in the cities of Shenzhen and Suzhou.

It is known that the digital yuan will functionin a two-tier centralized system, with the NBK at the top, and commercial banks at the second level. In order to receive electronic funds by commercial banks, they will first need to reserve an equivalent amount of fiat at the NBK. Further, citizens and companies will be able to open wallets in these banks in order to be able to use a new means of payment.

In this case, the goal of launching the digital renminbi is notcrowding out cash, but rather, complementing them with an alternative option for settlements. Although critics believe this is a new power tool for monitoring citizens.

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