China originally prevented the trade of cryptocurrencies within its borders but is now in a position to test its own digital currency. There are a few U.S. based multinationals that have agreed to participate in the test.
McDonald’s, Starbucks, and Subway have all been named on the People’s Bank of China’s list of initial companies to test, the new Chinese national digital currency. While Glitzkoin CEO Navneet Goenka has been an ardent fan of blockchain and crypto, he did express surprise at the willingness of the American retailers to test the Chinese official crypto. In his words, ‘… so what we will see is an American sitting in LA, sipping a Starbucks coffee and paying the bill with a digital version of the Chinese Yuan …. I don’t know what to say but it is probably – capitalism above patriotism’.
These firms are on the list of companies that include Chinese convenience stores, hotels, and other goods and services all located in the Xiong’an New Area south of Beijing.
The beginning of the test and release of the currency has not been scheduled as of yet, but the talk of the digital yuan has been going on for over a year. It is true that the trial phase would be more of an internal affair but, there little doubt that the final intention would have an international flavor.
Chinese consumers are very used to using digital payments. WeChat pay and Alibaba’s AliPay are more commonly used in China than even Visa and Mastercard. Using QR codes as payment is normal, and it is estimated that in 2019 there was around $20 trillion USD in mobile transactions made. Between 2019 and 2022 the number of Chinese making mobile payments is expected to rise from 577 million to 700 million, twice the population of the U.S.
China is well suited for digital payments for two reasons. Over 79% of the population has a bank account. Alipay at Wechat pay are able to fund mobile wallets through these accounts. They are third party payment companies which make a connect with a bank account. Smartphone ownership in China is also very high, even in rural areas. This allows people of all classes to take advantage of online payment systems.
If this test is successful, as it is expected to be, the Chinese national digital currency could quickly become a serious player on the global trading market.