[Correspondent Diary] People's Bank of China Summons Banks from Various Countries on Christmas Eve

Sudden Digital Currency Briefing Attended by All Countries... Mixed Interest and Concern
China's Digital Currency Introduction Countdown... Research on Embedding Chips in Cards, Gloves, Badges, etc.

[Asia Economy Beijing=Special Correspondent Jo Young-shin] The People's Bank of China, the central bank of China, called representatives of major banks in China on December 24 last year to hold a briefing on 'Digital Currency (CBDC: Central Bank Digital Currency)'. Since it was not announced in advance and was suddenly notified on Christmas Eve that a briefing would be held, the representatives of major banks in China were displeased with the People's Bank of China's unilateral handling.

An official who attended the briefing said, "I wondered how many people would actually gather due to the sudden contact, but except for one or two representatives who were out of Beijing, everyone attended." He added that since China was introducing digital currency, it was impossible to miss it, and representatives from other countries seemed to attend with the same sentiment.

People's Bank of China (Photo by Baidu)

China is accelerating the introduction of digital currency. The first public test was held in Shenzhen in October last year, and the second public test was completed in Suzhou in December. The third test was conducted in Beijing, the capital of China. The method was the same as the first and second tests. Through a lottery, 50,000 citizens were given 200 yuan (approximately 34,262 KRW) each, totaling 10 million yuan, as Hongbao (New Year's gift money). Beijing citizens used digital yuan during the Lunar New Year holiday period (February 10-17) at online and offline sports and clothing stores, theaters, hotels, and more.

Digital yuan is generated by digital codes without physical bills or coins. It is completely different from cryptocurrencies obtained through mining. It is legal tender issued by the People's Bank of China. The circulation of cryptocurrencies like Bitcoin is legally prohibited in China.

Digital Yuan of China (Photo by Baidu Capture)

China is already a cashless society. All payments are made through Alipay (Zhifubao) and WeChat Pay (Weixin Zhifu). If you buy something and offer cash, the clerk is often confused. Sometimes they get irritated, saying they have no change. When paying with Alipay, money is automatically withdrawn from the linked bank account.

The Chinese government has various reasons for rushing the digital yuan. In a cashless society, there is no need to print money, and digitalizing the yuan will eliminate black money such as bribes.

Also, it can render private companies' payment methods like Alipay and WeChat Pay useless. There are about 1 billion users of Alipay and WeChat Pay. This means that all Chinese people except young children without phones and very elderly people use them. The control over currency circulation is thus held by private IT companies. As a socialist country, China cannot tolerate this. This is also why the Ant Group's IPO was blocked. Jack Ma's remarks were just an excuse; the real reason is the state's desire to directly manage control over currency and personal information of 1.4 billion people.

Another reason for hastening the introduction of digital yuan is the internationalization of the yuan. China boasts the second-largest economy after the United States. However, the share of yuan in international settlements is around 3%. Since the 2008 global financial crisis, the Chinese government has declared the internationalization of the yuan but has essentially remained stagnant. After quickly introducing digital yuan, China plans to apply it to transactions with Belt and Road (land and maritime Silk Road) partner countries to increase the share of yuan in international settlements.

China also intends to preempt digital currency and expand its influence. There are even talks that China might covet the US dollar's status as the global reserve currency. The introduction of digital currency in China is only a matter of time. However, if the introduction of digital currency challenges the existing global political, economic, and social order, China will inevitably have to pay a corresponding price.

An official who attended the briefing said, "It seems China has prepared a lot for the introduction of digital yuan," adding, "In addition to smartphones, they are researching payment methods using plastic cards, rings, gloves, clothes, badges, etc., with embedded chips for digital yuan payments."

This content was produced with the assistance of AI translation services.