Trial run for Chinese cryptocurrency underway in two cities

WION Web Team New Delhi, India Dec 11, 2019, 09.30 PM(IST) Edited By: Bharat Sharma

BitCoin Photograph:( AFP )

Story highlights

Digital currencies will reduce cost, boost productivity, and be more reliable

Trial runs for the Chinese digital currently are underway in two cities, Shenzhen and Suzhou.

Once the trial period ends, the currency will be available through banks and consumers shall have access to it. 

What made China go digital?

China recently banned BitCoins, a global cryptocurrency. The trade within the dictates of digital currency is anonymous and untraceable, effectively out of the State's control. China intends to prevent this by curating a digital currency of its own. 

Digital currencies will reduce cost, boost productivity, and be more reliable.

For the Chinese government, the biggest advantage is the ability to track it. The authorities will know who's evading tax and whether any laundering is taking place.

The hidden dangers

Many critics of cryptocurrency believe that individual privacy and financial autonomy will be compromised and might open more appendages of control for China, which has a poor record on this front.

However, the digital currency module could also make China a global leader in economic trade, further accentuating its position in the global hierarchy.

In 2014, China overtook the United States as the biggest global goods trader.

To top it all off, China is the leading exporter in the world and has remained in that spot for the last ten years. Even then, international trade is dictated by Americans, for all transactions are recorded in USD.

China's digital currency will rid the Chinese trade ecosystem of the Dollar monopoly.

There is a huge market for digital currency. For instance, the Chinese currency share in terms of foreign trade was one per cent in 2010. In the four years that followed, it jumped by 28 per cent.

In 2016, the International Monetary Fund included the Chinese Renminbi or RMB as an international reserve.

Last year, Germany dismissed digital currency as "too risky" an idea.