China has severely advocated its digital Yuan project in recent times. However, projected as the world’s first major sovereign digital currency, the Chinese digital Yuan has not lived to its hype.
It was previously considered that the digital yuan can pose an imminent threat to the supremacy of the American Dollar. Even the White House was researching and predicting the potential threats it could suffice over the interests of the US. However, while inquiring about the efficiency and usability of digital yuan from its users, one may find out that the results have been rather disappointing.
Views of the Participants
The digital currency is still in its extended trial phase. There are around 500,000 participants that are passing their judgments on the project. The interviewed participants showed minimal interest in the new system. They found it hard to cope with and were reluctant to make a switch to this payment system. The participants favored the mobile payment systems of companies like Tencent Holdings Ltd and Ant Group Co.
Many people were of the view that the digital yuan will breach their privacy and give control to the higher authorities. The details of the project are yet to be discovered. However, it can be said that the Chinese Government has so far found itself in hot water over the new project. Moreover, it will take a lot of effort to make it an acceptable payment gateway locally and globally. Even if the locals accept this model, it will be a significant challenge to convince the international consumers, and businesses.
These concerns have capped the global payment share of Yuan to 3%. This is well below China’s stature and economic standing in the global market. Moreover, the digital Yuan is only expected to increase this share by a mere 1%. This means that the predicted global impact of the digital Yuan will be criminally minimal.
The Chinese President has reflected upon his high hopes from the project. As he wants to be less reliant on the US-led global financial system. On the contrary, the Chinese policy-makers have mixed thoughts about the scope of the project.
This project was initiated in 2014 and was highly anticipated in 2017 when China banned the use of crypto exchanges. It was then predicted that the digital Yuan will promote the growth of Chinese currency, and will counter money laundering from the country. However, the next few months are now highly critical to see if this project ceases to perform as well as it was initially predicted.