The digital yuan backed by China's central bank was used by the Dalian Commodity Exchange to pay for storage fees in a local warehouse last Tuesday, marking the first time the sovereign digital currency has been applied in the futures market.
The advantages of paying with the digital yuan
Compared to traditional bank transfers, paying this fee with the digital yuan has some advantages, including:
- absence of commissions
- real-time updates upon receipt
Additionally, users do not face the time constraints of large payment systems, state broadcaster CCTV reported Tuesday.
Analysts said that the first successful application of the digital yuan in the futures market provides a highly efficient, secure and convenient payment choice for futures trading and market participants.
It also paves the way for further testing of the digital currency in financial markets, cross-border payments and even large-scale applications nationwide.
Will the digital yand take over the US dollar?
China has accelerated its push to the digital yuan in recent years in the midst of a heated global race, a move that analysts say could create a new parallel financial system to challenge US dollar hegemony.
This year, the central bank extended trials of the digital yuan to both real-world and online scenarios in several cities such as Beijing, Shanghai, Shenzhen, and Suzhou, in east China's Jiangsu province.
Digital currency can now be used to pay for subway fares, shop online, and purchase products from a variety of vendors. It is also expected to be used in the upcoming 2022 Beijing Winter Olympics, allowing foreigners to open digital wallets and participate in testing.
Chinese cities are also actively promoting the use of the digital yuan to promote fintech innovation.
On Tuesday, the Shanghai local government said in its 14th five-year plan (2021-25) on building the city into a global financial center that it will consistently carry out trials of digital yuan applications and enrich application scenarios.
In July, China's central bank released a white paper on digital yuan research and development, stating that the nation will expand the coverage of test-based pilot test application scenarios.
China will combine this work with the development plan and local features in order to achieve comprehensive coverage of application scenarios and create a digital yuan ecosystem to further explore new models compatible with the Chinese economy and society, the white paper states. .
