China's Digital Currency Electronic Payment!!!Know it all !!

What Is DCEP?

DCEP, aka Digital Currency Electronic Payment, is a central Bank Digital Currency(CBDC) project led by the people’s Bank of China. The plan is part of the response to president XI Jinping’s advocate of “seizing the opportunity” of Blockchain technology. The digital Yuan is structured on a two-tier monetary system. Central bank-issued CBCD to commercial banks and commercial bank issued CBCD focused on the public.

Why China Developed it?

The beginning of China’s DCEP project started way back from 2014 when PBOC founded a research team specializing in cryptocurrency and established the research of Digital currency in 2017.

You may wonder why the Chinese government developed its digital currency when mobile payment has been part of daily life for many Chinese citizens. The deputy director of PBCO’s payments department, Muchangchun, gave his answer “It is to protect our monetary sovereignty and legal currency status. We need to plan for a rainy day.”

The Pros

• Compared to physical money, DCEP has its distinctive pros. For the government, a digital yuan could eliminate the money printing costs.

• For commercial banks, DCEP could facilitate more money transactions with lower costs, increases business innovation while minimizing the risks.

• For the public, DCEp could save them from indirect transaction fees for interbank transfer. Domestic and cross border payments will also become less frictions.

What It Means To The Cryptocurrency markets?

It is the biggest concern of the crypto markets. We can imagine the launch of DCEP will broaden society’s acceptance of Blockchain technology and diminish people’s prejudice against it. With a better understanding and real-life applications of this ground-breaking technology, the traditional investment community could be more open to Blockchain investments. This potential shift of attitude could bring positive impact to the existing cypto space. Although there were concerns over the current stablecoin space, however, it seems that it is too early how DCEP would affect the stablecoin markets.

What We Can Expect In Term of CBDC?

We can foresee that there will be more countries and regions jumping on the CBDC bandwagon after china, and the US could be one of them. In light of the recent COVID-19 pandemic, some US law makers have discussed about how to digitalized dollar could be part of the stimulus package. Meanwhile in hongkong, former HKMA chief executive suggested that a digital currency covering the four regions- china, japan, korea and Hong-Kong should be promoted. He believes that this initiative will not only diminish the inconvenience of cross border payment for enterprises. Also it will be better tackle the economic stagnation in East Asia.

Now that the official lunch of DCEP seems to be just around the corner, We should better prepare ourselves for more digital, convenient and better future.