China’s e-yuan Digital Currency part of Concerted 2020 Fintech Push
While details remain unclear, Reuters is forecasting that China’s proposed e-yuan sovereign digital currency may be one of the breakout fintech developments of 2020. Several finance and crypto pundits continue to state that different nations will move forward with their plans to issue state-backed tokenized versions of their fiat currencies.
Chinese Digital Currency May Combat Rising Bad Debt Problem
According to Reuters, China’s proposed e-yuan digital currency may help regulators combat rising bad debt. The country reportedly has about $341 million in bad debt owing to the practice of people offering up the same collateral for multiple loans.
If authorities in Beijing decide to adopt a more broad-based approach to blockchain technology adoption, then decentralized technology could help to eradicate some of the illegal but commonplace activities in the country’s financial system. China’s President Xi Jinping has already hinted on the administration’s desire to make blockchain a ‘core’ technology in the country.
Thus, apart from a simple rollout for electronic payments, China could extend the digital yuan and its blockchain basis into its national financial framework. Such a move would mean the proposed e-yuan digital currency is only a step in the direction of the total digitization of China’s economy.
However, some commentators have remarked that Beijing’s blockchain fascination does not extend to the acceptance of open decentralization. Critics argue that China’s blockchain adoption is merely an extension of the authoritarian regime’s drive to attain total control of the Chinese public.
A broad-based blockchain adoption might empower financial watchdogs in matters such as tax evasion and money laundering. The move could also see Beijing being able to achieve an unprecedented level of surveillance on the money flow within the country.
2020 CBDC Wars
China is one of many countries looking to create a national digital currency. Such is the rapidly expanding nature of the pool that some commentators forecast that 2020 will be the year of the central bank digital currency (CBDC) wars.
The announcement of Facebook’s Libra appears to have sped up the process for many countries. Since the launch of the project’s whitepaper, stakeholders in government, central banks, and financial regulators in several jurisdictions have lambasted the proposed stablecoin payment gateway, highlighting money laundering risks and threats to national monetary policies.
As previously reported by BTCManager, mainstream financial agencies like the European Central Bank (ECB) and International Monetary Fund (IMF) are studying the risks and rewards tied to CBDCs. Countries like Turkey and Bahamas are also looking to launch CBDCs in 2020.