According to Yao Qian, the People’s Bank of China director, China’s digital Yuan utilizing smart contracts. Moreover, it will be built to counter Alipay-like payment platforms that privately-owned conglomerates design.
International finance forum
He argued at the International finance forum in Beijing. He said that simply stimulating the digital Yuan’s physical counterpart would not be enough for success. The Digital yuan however, has to move towards smart currency to get full benefits from being digital.
Moreover, the digital Yuan is moving towards smart currency with the use of smart contracts. According to him, the central bank needs to innovate the legal fit money to keep up with the tides of digitalization.
He also listed the European Central Bank, Bank of Japan, and the central bank of Canada. Moreover, he showed them as examples to show how to work on smart contract-based digital currencies.
He reportedly said that China’s initial idea of the digital Yuan was to conquer the impact of private payment platforms. However, private payment platforms have become increasingly popular, possibly implying the country’s ubiquitous payment service.
However, it is suggested that the government did not develop digital Yuan as a surveillance tool to track all the transactions in real-time.
Moreover, the digital Yuan needs to balance protecting user’s privacy and a crackdown on crimes like tax evasion, money laundering, and terrorism financing. He further explained that the central bank could provide users digital currencies without intermediaries.
But for this to happen, that digital dollar and digital yen should run directly on blockchain networks like Ethereum and Diem. He further added that layered options could enable the central bank’s digital currency to benefit better bank-less people and achieve financial inclusion.