Topics Covered: Cyber security related issues.
China’s digital currency:
Context:
China in February launched the latest round of pilot trials of its new digital currency, with reported plans of a major roll-out by the end of the year and ahead of the Winter Olympics in Beijing in February 2022.
How does China’s digital currency work?
Officially titled the Digital Currency Electronic Payment (DCEP), the digital RMB (or Renminbi, China’s currency) is a digital version of China’s currency. It can be downloaded and exchanged via an application authorised by the People’s Bank of China (PBOC), China’s central bank.
Key features of the digital currency:
- This is a legal tender guaranteed by the central bank, not a payment guaranteed by a third-party operator.
- There is no third-party transaction, and hence, no transaction fee.
- Unlike e-wallets, the digital currency does not require Internet connectivity. The payment is made through Near-field Communication (NFC) technology.
- Unlike non-bank payment platforms that require users to link bank accounts, this can be opened with a personal identification number.
InstaLinks:
Prelims Link:
- Various cryptocurrencies.
- Cryptocurrencies launched by various countries.
- What is Blockchain technology?
Mains Link:
What are Cryptocurrencies? Why there is a need for regulation? Discuss.
Sources: the Hindu.
