The wave of Central Bank Digital Currencies is spreading throughout the world and various governments are already making plans to implement their own. China is one of those countries on the frontline in developing a workable CBDC.
According to a recent report by the People’s Bank of China (PBOC), the new digital currency has already handled around 2 billion yuan ($300 million) worth of transactions. There have been around 4 million separate transactions in all.
Responding To “Threat”
Apparently, world governments are scampering to develop CBDC in response to the rise and popularity of cryptocurrencies like Bitcoin. Governments see these cryptos as a threat to their long-standing grip on financial networks and population control in general. This is because cryptos like Bitcoin run on trustless networks with no centralized authority. In essence, cryptos are taking power away from governments and handing it back to the people.
Since most people want to adopt the new digital currency system, governments came up with the idea of creating digital currencies to replace fiat. Any holder of a CBDC will lay claim directly to the Central Bank.
2 Billion Yuan Spent On Pilot Schemes
Speaking during the Fintech Week conference in Hong Kong, the governor of the PBOC, Yi Gang, said that around 2 billion yuan had been spent in pilot projects in 4 Chinese cities.
He added that the pilot schemes were working out well, although the project was still in its infant stage. Yi Gang envisions a world where fiat and digital currencies can coexist without much turmoil and competition.
CBDC Vs Cryptos
Granted, Central Banks are expending resources in an effort to fight back the encroachment of the financial system by cryptocurrencies. However, the fact that cryptos like Bitcoin have already gained mass adoption indicates that this battle will be tough.
In fact, there are those in the crypto and financial community who think that CBDCs are a futile knee-jerk reaction by governments (Central Banks) to retain control of the financial system that has been under their firm grip for centuries.
