Will Other Countries Follow Suit?
The Chinese government has been openly discussing the release of its own Central Bank Digital Currency (CBDC) since last October. China's CBDC will likely be based on blockchain technology and will be pegged to the value of the Yuan. The 'digital yuan', also called the DECP was due to be released sometime in 2020, but we might see it sooner than expected.
DECP & the Coronavirus
While the DECP was supposed to be released this year, the Chinese authorities have allegedly speed up its development. This was done supposedly for a reason that seems to be not directly linked to finance, the Covid-19 Coronavirus, that has been spreading across China and the rest of the globe.
The Chinese government is printing a lot of money to try to alleviate the economic problems, which may be promoted as an option. https://t.co/QXuTzdHZaZâ Crypto Even (@Crypto_Even) March 3, 2020
Releasing the DECP early would benefit the Chinese government in 2 primary ways. First off, it would save the government the fee of printing new bills and transporting them. Seeing that China has likely taken quite a bit of financial damage since the outbreak of Covid-19, it seems that they would be more inclined to save funds wherever they can.
Another possibility it that the Chinese Government is trying to stop the spread of Covid-19 by switching to digital cash. It has been suggested by the World Health Organization that contaminated bank notes might be spreading the disease. By switching to a digital alternative, China might reduce the number of people exposed to the virus.
Seeing that China is the world's second largest economy, the switch to a CBDC will something the world will watch and possibly replicate.
Written by Jonathan Ganor
Writer & cryptocurrency aficionado