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The former president of the Bank of China says digital yuan can replace cash

Former President of the Bank of China, Li Lihui, has announced that the digital yuan is about to be launchedand this currency can replace cash if four key conditions are met.

The central bank’s digital yuan is currently in the test phase and is causing a stir among Chinese internet users. The search for the effects of the digital yuan and cryptocurrencies in general has skyrocketed recently.

Lihui gave a live streaming chat on People’s News on May 5, stating that, unlike WeChat Pay and Alipay, the digital yuan is independent of third-party networks or banks.. However, he said that four important conditions must be met for the digital yuan to replace cash or other current payment solutions:

“Whether the digital yuan can become the dominant currency and primary currency depends on whether it is more efficient, lower transaction costs, an adequate economic scale with commercial value, and people’s acceptance.”

Different forms of digital currencies

The former president of the Bank of China says digital yuan can replace cash
The former president of the Bank of China says digital yuan can replace cash

Li believes that a currency that uses digital technology can be called a digital currency.. It defines digital currencies in three categories: legal digital currencies (in relation to digital currencies issued by the central bank or CBDC), blockchain-based cryptocurrency and digital currencies from trustworthy institutions.

Cryptocurrencies like Bitcoin are anonymous, but transparent. According to Li, the digital yuan also enables technologies that enable anonymous transactions.. However, he added that the frequency and amounts of anonymous transactions would be limited.

As Cointelegraph has previously reported, the Bank of China has piloted its CBDC at various locations and assumes that it will not cause inflation.

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