China’s Financial Associated Press reported on Monday that the Alipay app has launched the digital renminbi (digital RMB) payments feature. However, the solution is not available to all users except for those on the company’s whitelist.
Digital renminbi is China’s central bank digital currency (CBDC). The digital RMB is legal tender and has equal value as fiat currency.
Users that have access to the new Alipay service can register a wallet linked to the Internet Commercial Bank. Per the report, they can either register these wallets anonymously or use their real names which makes KYC quite optional.
China’s central bank claims that the digital currency will help to fight corruption, money laundering, gambling and may improve financial transaction efficiency.
Contrary to regular wallets, customers can conveniently transact through the wallet using their phone number or email. However, users are allowed access to just a wallet. According to a report, Internet Commercial Bank has conducted many trials for digital renminbi and hopes to expand further.
China’s Development of the Digital RMB
China has been leading the pack regarding the digital currency development and has actively carried out several tests. As of April, the digital renminbi has been tested across 10 regions in the country.
The PBoC has touted that the aim of the CBDC is to facilitate cheaper and faster transactions both domestically and internationally. However, not many people believe in the practicality of the digital RMB.
Eswar Prasad, an economics professor, believes that the launch of a digital currency will not in any way improve the global use of the renminbi. The U.S. dollar constitutes more than 60% of the world’s reserve currency compared to the renminbi (2%), Prasad stated.
Nevertheless, experts noted that the digital RMB ecosystem, tagged “2.5-tier” in the industry, is steps closer towards establishing. They believe that smart contracts may become a major draw for the digital RMB allowing new businesses to build around it, hence expanding its use cases.