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The Future of the Yuan Currency
The Future of the Yuan Currency
The Yuan currency in China is a powerful currency and one of the contenders against the US dollar.
The Yuan currency in China is a powerful currency and one of the contenders against the US dollar. A report from CNBC in the last quarter of 2020 shows that there's more room for the Yuan currency to gain against the greenback. There's also a prediction by Morgan Stanley analysts that the Chinese yuan will account for 5% to 10% of global foreign exchange reserve assets by 2030.
China is actively working towards making Yuan a global currency but that could take a while as it would require a lot of effort and factors to displace the US Dollars from its top position.
The Digital Yuan Currency
The world has gone digital, even though some regions are yet to catch up with this movement. China has always been at the top of its technology game and has digitized payments for the longest time now. The goal for them is to completely drop cash and make digital payments for virtually everything. The average person in China has a smartphone that can make and receive payments without hassle, especially with platforms like AliPay and WeChat Pay among other smart apps.
China's struggle to internalize its currency goes way back as a decade ago, as explained by a study from 2012. Today, they have made payments as easy as sending a text message, as you can do it with a click or two on your smartphone or with a fingerprint scan.
However, the Chinese government isn't stopping there, as they are working towards the launch of the official digital currency in China known as the Digital Currency Electronic Payment (DC/EP). DC/EP is the digitized version of the Yuan and is designed to use blockchain technology.
This means it would be a top contender with other existing cryptocurrencies such as Bitcoin that has already been cracked down in China for a while now. Using blockchain technology will increase the speed of transactions and change how digital payments work in China. This could eventually challenge the Society for Worldwide Interbank Financial Telecommunication (SWIFT), which is the global provider of secure financial messaging services.
This move will only strengthen the Yuan currency and increase its value in the global market. Several platforms such as the Yuan Pay zzzzzzzzGroup are also arising and are ready for China stated backed coin which was announced in November 2020.
Bottom Line
China is creating a completely cashless society, which is what the global finance sector is aiming for. There's so much more to expect from the announcement of this currency but it's also important to note that they've been actively working on this for over five years now and have created structures and regulations over the years to make it thrive.
The Chinese Government is working hard to strengthen the yuan currency, even if it means making a digital coin out of it. Generally speaking, it will be easily and warmly accepted by the people, companies, and organizations in China, considering how much the country has been digitized in the past decade.
