Which city is China's technology center
China is testing the cashless society in Shenzhen
The Chinese city of Shenzhen has distributed 10 million yuan (equivalent to around 1.26 million euros) in digital currency to 50,000 citizens.
China wants to test what people would do in a cashless society.
There are similar considerations in the EU and Sweden to introduce a digital currency.
It is an experiment on the financial world of the future: The Chinese city of Shenzhen distributed 10 million yuan (equivalent to around 1.26 million euros) in digital currency to test what citizens would do in a cashless society. Shenzhen is China's technology center and home to companies like Tencent and Huawei.
In early October, according to the China Daily, 50,000 people who live in the Luhou district of Shenzhen and were selected by lot received digital “red envelopes” each containing 200 yuan (about 25 euros) of the digital currency. In China, money is traditionally given away in red envelopes, especially for the Chinese New Year celebrations. Allegedly around two million people had previously applied to take part in the experiment.
There are also considerations in the EU to introduce a digital currency
The digital currency is not a crypto currency like Bitcoin or Ethereum, but a digitized version of the country's currency in Renminbi, which is administered by the Chinese central bank, the People’s Bank of China. The four largest state banks in the country are taking part in the test in Shenzhen, according to "China Daily". People had to download the government's digital currency app to participate and spend their money at nearly 3,400 participating stores in the district between October 12 and 16. A bank account was not required for this.
The EU, the USA and Sweden are also considering introducing a digital currency. The central banks want to use it to replace cash, but in Europe the digital euro is only supposed to complement it. The European Central Bank wants to decide on the start of a digital euro project in mid-2021.
China has been pushing ahead with the digital currency so far. On the one hand, the government wants to present itself as particularly modern. Beijing wants to make the country the number one high-tech nation. Many Chinese are already using their smartphones when shopping and using the services Alipay, the payment service provider of the Alibaba company founded by Jack Ma, or Wechat, the Chinese Whatsapp. Switching to a cashless currency system shouldn't be difficult for you.
On the other hand, Beijing also fears that alternatives like Facebook's Libra will lead to capital flight and absolutely wants to prevent this. With the digital renminbi, China also wants to strengthen its own currency - and could possibly weaken the US dollar as the leading international currency. "The Chinese government is pursuing three goals with the digital renminbi: more control over financial flows, propaganda success as the inventor of the world's first digital currency and the strengthening of the Chinese currency as an international means of payment," said Hanns-Günther Hilpert, Asia expert at the Science Foundation and politics (SWP), the "Handelsblatt".
Proponents of the digital currency hope to be able to fight money laundering, tax evasion and corruption more easily. Opponents fear more surveillance and control by the government.
This text has been translated from English and edited. You can find the original version here.
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