Lauren Ryan from Thinktank speaks to Laurence Parker-Brown for our IN60 series. The Inside Adviser
That consumers are influenced heavily by well known, trusted brands comes as no great surprise. What does, though, is that they rate life insurance as the least most important tool in ensuring financial security.
China has launched its own digital currency to take on the US dollar
China has quietly done what many considered unthinkable, by launching its own digital yuan this week, created to reduce its reliance on cash. Real-world trials have already begun in the cities of Shenzhen, Chengdu and Suzhou. The People’s Bank of China (PBOC) has been hard at work developing the Digital Currency Electronic Payment (DCEP) since its digital currency program first begin in earnest, in 2014.
The unprecedented steps China has taken toward developing its own digital currency is all aimed at one day overtaking the US dollar as the global reserve currency. However, China’s dream of the renminbi accomplishing this goal will first require it to deal with a mountain of US dollars on deposit in Chinese banks. US dollar reserves in China are so large, that banks are struggling to loan the currency back out. The value of its reserves of greenbacks is said to be in excess of $1 trillion.
This aside, Beijing is hoping its e-yuan will overtake the US dollar as the global reserve currency, and its launch was timed to coincide with the 2022 Winter Olympics, one of the most important global events in which the world’s focus is on China, to help showcase the digital currency and the country’s move towards going cashless. While Covid-19 has hit the number of foreign visitors to the Games, the Olympic spirit and vision are inescapable, and the world is watching.
The digital yuan’s debut during the Winter Olympics follows a year of pilot runs and heavy marketing across the country. According to the PBOC, at the end of 2021, more than 260 million people had e-CNY accounts and total digital yuan transactions reached nearly 90 billion yuan (US$14 billion, or €12 billion).
What is interesting about the currency is that it is not a cryptocurrency like bitcoin; in part, because it isn’t a “decrentralised” currency, which is the fundamental backbone to most cryptocurrencies. The digital yuan will be entirely controlled and issued by the Chinese Communist Party (CCP), through the PBOC. Think of it as just another layer of the control China seeks to impose on its people and their privacy.
The other concern is that the actual stability of the financial system may be compromised due to cryptocurrency’s instability. The US dollar is backed by the Federal Reserve, while a cryptocurrency is a speculative investment.
The PBOC will also need to get people to download a digital yuan app and switch from WeChat and Alipay. Therefore, integration with WeChat is key, and gives the e-CNY a potentially huge user base.
