The Chinese central bank’s development of the digital renminbi has apparently sped up this year, as its use and circulation have been tested on a large scale in several cities, including Shenzhen, Guangdong province, and Suzhou, Jiangsu province.
When officially launched, the digital renminbi will have far-reaching influences across the board. It will directly promote the advancement of financial technology, the realization of a cashless society, and change the development model of the payment industry.
The era of mobile payments dominated by Alibaba and Tencent will have to change, despite that the digital renminbi will co-exist, if not closely cooperate, with the two companies for a certain period of time.
In the long run, the launch of the digital renminbi will foster fair competition in the mobile payment market so as to form a “unified and integrated” payment market, in which financial transaction data, an important kind of strategic asset of the country, can be unified and better supervised and managed by the State.
With the launch of the digital renminbi, the whole financial technology industrial chain can be upgraded, stimulating the development of the information technology system of the whole banking industry.
Also, after the digital renminbi is launched, especially after relevant technological and institutional systems mature, the digital currency will offer policymakers more options and conditions to translate their intentions into reality.
The launch of the digital renminbi can also help boost the renminbi’s internationalization, although this depends on the further opening-up of the domestic financial market.
The scale and frequency of the tests of the digital renminbi indicate China is likely to roll out the first digital currency standard system in the world, giving the country a leading position in drafting the international digital currency standards in the future.
Overall, the launch of the central bank’s digital currency will be a major boost for the country’s digital economy and a promoter of the in-depth development of the country’s financial technology industry.
