FOREIGN VISITORS TO the Winter Olympics in China will be able to use the new “electric renminbi” to buy things—even if they don’t have a bank account in the country.
China’s digital currency is being gently rolled out to the public, local and foreign, in huge hunks of cash before a full launch at a date still unspecified.
From yesterday, Meituan, one of China’s tech giants, started allowing restaurants, hotels, cinemas and 200 other types of online/ offline merchants, to accept the new currency. It is following the lead of Alipay, which started allowing digital currency payments last year.
BIGGER THAN VISA, MASTERCARD
Many people in Hong Kong, including foreigners, have latched on to Alipay, which came from nowhere to became a massive payment system handling more payments worldwide than VISA or Mastercard.
WeChat, also growing in popularity in Hong Kong and around the world, will also allow Chinese digital currency payments on WeChat Pay as part of the experimental roll-out.
China has been working on digital currency for more than six years. The new Chinese “coin” doesn’t have an official name yet, but is referred to under various names, such as the “e-CNY” (derived from electronic Chinese yuan), the “Digital RMB” and so on.
In 2020, 10 million yuan was stuffed in 50,000 digital red packets and given out free to Shenzhen residents. Other local governments, including that of Suzhou, also ran giveaways, and many followed – the currency is used in Xiongan, Chengdu, Shanghai, Xian, Qingdao, Dalian and other places.
By December of last year, 261 million members of the public signed up for digital currency. Last month, China’s central bank launched an e-CNY wallet for members of the public to download.
China is taking an opposite tack to digital currency than many other countries. While Bitcoin is popular outside China because of its relative anonymity (or a belief that it is anonymous), it is widely used for nefarious purposes, such as money laundering, and the purchase of drugs and illegal pornography.
In contrast, China aims to have its own digital currency because it is trackable –and thus can stop the literally trillions of dollars of value moved for illicit purposes. By cutting avenues for money-laundering, the aim is to reclaim huge sums of money for the public purse.
INDIA, RUSSIA, MAY FOLLOW
Other large countries, including India and Russia, are considering following China’s lead to cut the “negative effect” cryptocurrencies and replace them with “positive effect” digital currencies.
While Bitcoin and other currencies have certainly made individuals rich, there is a growing school of criticism which says that the public would benefit far more if digital currency becomes an enabler of transactions in ways which cut financial crime, money laundering and corruption, rather than enable and facilitate such acts.
Discussions continue and the jury remains out.