China is planning to introduce a virtual money payment system in the country and to kickstart this, China has already started testing its first official digital currency in four of its cities.
The pilot rollout is a part of research and development being carried on the official digital currency of China by the country¡¯s central bank - The Digital Currency Research Institute of the People¡¯s Bank of China (PBC). Termed as DC/EP (digital currency/electronic payment), the official digital currency will also be used during the 2022 Winter Olympics Games in Beijing.
Though it has not been officially released, a trial run of the currency in four cities is being carried out within a small group of banks and users. Going forward, the digital currency is expected to be be scaled to a wider application with an improved technology and system, as per a report by the Global Times.
In order to improve the technology used for the new payment mode and to make it more secure, more banks will continue to participate in this testing. Apart from the banks, telecom majors in the country might also join the testing going forward, confirms Chen Bo, director of the Finance Research Centre at the Institute of Finance and Economics at the Central University of Finance and Economics in a report.
¡°There will be two types of players in future trials, the banks and telecom companies. At present, the central bank is testing the software of DC/EP, and whether it will be combined with 5G and sim cards in the future needs to be discussed,¡± Chen said.
China¡¯s DC/ EP is expected to reach one trillion yuan (USD140 billion) in the coming years as per a research by brokerage house Citic Securities. In comparison, the total market capitalisation of cryptocurrencies like bitcoin, is about USD 200 billion.
A big propellant for the move might be the novel Coronavirus that is still on the spread across the globe. Although China claims to have recovered from the pandemic to much extent, a second wave of infections is most likely in the country.
To make sure that physical currency is not a source of spread of the virus, such digital currencies will help curb the threat. Back in February, China quarantined large quantities of bank notes in the hotspots and even stored some of it in warehouses temporarily. The move was in line to curb the spread of the disease through such modes.
A research by the National Center for Biotechnology Information (NCBI) suggests that paper money and coins can be potential vectors of transmissible diseases. The report mentions ¡°Banknotes recovered from hospitals may be highly contaminated by Staphylococcus aureus [often the cause skin infections, pneumonia, heart valve infections and bone infections].¡± As for coins, it mentions ¡°Laboratory simulations revealed that methicillin-resistant S. aureus can easily survive on coins, whereas E. coli, Salmonella species and viruses, including human influenza virus, Norovirus, Rhinovirus, hepatitis A virus, and Rotavirus, can be transmitted through hand contact.¡±
Various studies have been conducted to check the spread of Coronavirus through physical currency. Though no solid connection has been established as yet, it is known that the Coronavirus can last on surfaces for multiple days.
More so on hard surfaces like Copper. Thus, more caution is advised when handling coins as the virus can survive on them for longer than on bank notes. Experts recommend the use of gloves and alcohol-based sanitizers (70% alcohol) for those handling such coins frequently.
China¡¯s use of digital currency will eliminate all such possible threats. For a country to have recovered from the deadly Coronavirus, such measures to tackle any future waves of the infection can help multifold in all aspects.