Digital Currency China

By Author: CA Dr Aman Chugh
Total Articles: 2
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In this post, we talk about news that, off late, has been doing rounds on social media. It is related to the launch of its own digital currency by China, known as E-Renminbi. Post its launch, it shall be the first digital currency to be operated and used by a major economy. However, here are the myths and facts about the same:-

FACTS:-

1. China has been trying to develop and implement its own digital currency for a few years now. Back in 2018, they intended to launch it, however, it took some time and maybe later this year, it may be launched.
2. The currency system is being researched and developed by the Digital Currency Research Institute, which is part of the People’s Bank of China. Right now, they are in the process of making the system foolproof and debugging it.
3. The new digital currency shall be pegged to their existing currency and will become a sovereign digital currency. It will help decline the cash usage in the economy, in the wake of physical distancing and personal hygiene concerns raised by the Corona Virus pandemic. Many of the government officials in China may start receiving their remuneration via digital currency by May.

MYTHS:-

1. As against the spreading belief, the launch of digital currency by China is not going to have any effect on the US Economy or any other economy. The currency is not going to be pegged against USD, rather pegged to their own currency.
2. The Chinese Currency is being devalued by the Chinese Government on its own. It has nothing to do with the introduction of the e-renminbi. It needs to be clarified that the e-renminbi is pegged to the domestic Chinese currency, hence its introduction cannot mean devaluation in the regular currency.