Bank of China’s Former President Lists Four Key Conditions For Digital Yuan to Replace Cash

The former head of the People’s Bank of China announced that the soon to be launched Digital Yuan will be able to replace cash if certain key conditions are met.

The former President of China’s Central Bank, Li Lihui recently appeared on a live streaming talk where he revealed that the launch of the digital Yuan, also known as DCEP, is fast approaching and he also listed the four key conditions he believes will allow the DCEP to replace cash.

China’s pursuit of the digital yuan has been unswerving even amid the coronavirus downturn. The Digital Cash Electronic Payment (DCEP) is being trialled with government officials this month, and several pilots have been made public in partnership with notable businesses and restaurants.

Internet searches on the digital Yuan and DCEP have also surged in China and Lihui appeared on a live stream of the People’s News on May 5 in response to the public curiosity. He said, that for the digital Yuan to replace cash and other widely used solutions like Alipay and WeChat, four key conditions had to be met.

In his appearance Lihui was quoted, “Whether the digital Yuan can become the dominant form of currency and the means of mainstream payment will depend on whether it has greater efficiency, lower transactions fees, enough economic scale with commercial value, and is accepted by the people.”

China Already Cashless Society

As China is basically already a cashless society with most payments being done via WeChat pay or Alipay, many have questioned the necessity for a digital Yuan.

Echoing the message of Mu Changchun, the Director-General of the Institute of Digital Currency of China’s central bank, People’s Bank of China in his talk at the Singapore Fintech Festival last year, Li Lihui explained that the digital yuan will provide redundancy to the popular cashless payment service apps.

Unlike WeChat Pay and Alipay, the DCEP will be independent from any third party bank and network. The reason given behind the DCEP development is due to the potential risks the central bank foresees if there would be any technical difficulties with these electronic payment entities which are so heavily relied upon by 96% of the Chinese population.

Li also revealed that like cryptocurrency, the digital Yuan technology can be used to transact anonymously but their will be limits placed on the frequency and amounts of any anonymous payments. 

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