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October 3, 2022
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Digital Yuan and e-Krona: the revolutions of China and Sweden

Both were two of the most talked about topics of this decidedly surprising 2020 for the cryptocurrency industry. They have a common feature: they have not yet seen the light of day, although they are in advanced testing phases. 2021 could be the year of its launch and, in any case, it will be something that can change the financial and cryptocurrency sector.

Digital Yuan, where are we?

Let’s start by saying that what we call Digital Yuan should actually be called DC / EP, an acronym for Digital Currency Electronic Payment. It is a “cryptocurrency” that will be issued directly by the Chinese central bank (PBoC, People’s Bank of China), it will serve mainly as a means of payment. It is not a real cryptocurrency, but a digital currency. Cryptocurrencies, in fact, by definition, are pseudo-anonymous and decentralized, that is, without an entity that controls them. The digital yuan, in contrast, is issued by a central entity that can track movements and transactions, presenting a serious problem: user privacy.

Anyway, China is testing it in order to digitize the payment system, in addition to reaching the so-called no bank account.

Tests are at an advanced stage. Just remember that on December 13th, in the city of Suzhou, a special digital yuan raffle was held to promote purchases on the e-commerce site JD.com and in physical stores. This resulted in up to 20,000 transactions.

Rumors suggest that the Chinese digital currency will go global. In Hong Kong, in fact, tests are underway to try the Chinese digital currency for international payments. It would be the first time that the digital yuan has crossed China’s borders.

This could lead the Chinese digital currency to compete directly with other fiat currencies for international payments. The dollar and the euro are being warned.

The Swedish e-krona

The European response to the Chinese digital yuan is the Swedish e-Krona, issued by Riksbank. Also in this case, tests are in progress, but there is much more than that. According to Bloomberg , Sweden would like to migrate to digital currencies, becoming a cashless society.

The Swedish venture is likely to infect the European Union. In fact, Sweden kept its currency, the krona, despite being part of the European Union. And in Europe there is free movement of capital, which means that the future e-krona could be used by all EU member states. The European answer could be the digital euro, although this is only a theoretical concept at the moment.

What is certain is that when the digital yuan and e-krona leave the testing phase and are officially launched, the central banks of the world will have to take note and act accordingly.

Source: Cryptonomist

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