China’s Digital Yuan to Test in Petty Payment First
A director of the technical department of a bank in China’s Suzhou revealed that the current digital currency application in Shenzhen and Suzhou is mainly concentrated in small-scale scenarios such as retailing, public transportation card recharge, catering.
The application scenarios for China’s digital yuan will be extended to large scenarios such as health care, education, e-commerce services, tourism, cultural consumption after the authorization by the central bank, so as to further improve the payment efficiency and financial service experience.
As China’s digital yuan has the characteristics of offline transfer, the expansion of application scenarios brings new challenges to the stability, anti-money laundering monitoring and transaction processing efficiency.
“We’re doing a variety of stress tests internally as well. For example, when the processing capacity of transaction suddenly increases, whether the whole transaction processing system will breakdown; therefore, the technical department has been designing new technical solutions to ensure the operational robustness and reliability of the system when the transaction processing surges.”
On the morning of Aug 17, the technic personnel of the bank discussed the new application scenarios that could be expanded in the pilot project. However, most technical personnel think that these application scenarios, which are oriented to C-end and have a large amount of transaction payment processing capacity, do not have the conditions to pilot in a large scale. One of the important reasons is that they are still testing the offline transfer function.
How will China’s digital yuan promote China’s economic development?
One is to increase the function of currency. The original currency is a general equivalent, but it can not carry the information of non-general equivalent. Digital currency, including blockchain, has functions like the bookkeeping can record the time, place and destination of currency circulation, which is of great significance for the tracking of money for some specific purposes, and can effectively prevent money laundering.
Second, it will have a potential impact on the exchange of currencies in the future. If we can make use of the digital currency to expose the appreciation process or interest transfer process of the US dollar, it is bound to change the hegemonic status of the US dollar, and all countries can better protect the interests of their own currencies by using the digital currency.
Third, in the long run, if the advantages of blockchain are applied to the construction of digital yuan, it will provide a lot of opportunities for information services. That is to say, in addition to the general equivalent information-bearing service function, it can also carry the resource allocation function.