Cryptocurrency News Today – the People’s Bank of China’s former President, Li Lihui, has asserted that the Chinese digital yuan will in the future replace the country’s physical money. Lihui also explained that very much unlike WeChat Pay and AliPay, the digital yuan (DC/EP) is designed to function as an independent token with no ties to any third-party bank. At press time, the digital yuan is now in the testing phase. Its launch is expected to occur sometime in the year.

Digital Yuan To Replace Physical Cash

According to the People’s Bank of China’s former President, if DC/EP manages to meet some conditions, then it will have the ability to replace physical cash in China. According to Lihui, unlike AliPay and WeChat Pay, which are the two options that are widely used in the state, the digital yuan has been designed to function as an independent option with no ties to any third-party banks. Before Lihui’s prediction can take place, there are four conditions that must be met.

The conditions that must be met for the Chinese digital yuan to replace physical cash include higher efficiency, acceptance of the people, lower transaction costs, and enough economic scale with commercial value. This move will come as a huge step by China towards achieving its goal of launching a state-back digital currency.

Experts Believe That the Digital Yuan Could Weaken the Value of the USD

Currently, the USD is the world’s reserve currency. This is because over 80% of all international transactions are done in USD. Some experts are now claiming that China’s digital yuan could threaten the USD’s global value. They believe that China might use digital yuan to carryout international trades.

The USD’s global dominance might not be the same after the Chinese digital yuan becomes operational. Lihui categorized currencies that make use of technology in three segments. They include legal digital currency, Blockchain-based crypto, and trusted institution digital asset.

China is reportedly on its way to becoming the first country to issue its first central bank-backed digital asset in the world. Apart from China, there are several other central banks around the globe that are researching and studying CBDCs. These entities are also contemplating to issue a similar digital currency in the coming months and years.

However, the digital currency community has asked questions regarding the intentions of the Chinese governments for launching a digital yuan. There are concerns that Beijing might use this new technology as a mass surveillance tool to spy on its citizens.