Among the world's largest economies, China is the first to develop an electronic payment method and its digital currency has already been tested and is now being rolled out in some major e-commerce platforms.
This digital currency is the digital version of china’s national currency ‘Yuan’. This electronic payment is supported by Yuan’s deposits held by the central bank of China. This process has been under development for more than 5 years. During this time the banks were asked to convert a portion of their Yuan holdings into digital form. Banks were asked to transfer digital currency to small businesses and citizens via mobile transfer. The primary distinction between this digital currency and other crypto currencies is its legal status. The digital currency is distinct from other crypto currencies in that it has been legally sanctioned by the government. This digital currency transformation will assist China in bringing their unbanked population into the mainstream economy. It will also assist them in transitioning to a cashless society. There are numerous distinctions between digital currency and crypto currencies. The term "digital currency" refers to decentralization, whereas "crypto currency" refers to centralization, implying that their economies are not interconnected.
The digital method allows the Chinese government to keep a better record of cash outflows in the economy and make more informed decisions. The new money system is based on digital transfer via various modes such as mobile services, QR codes, and a token system. China has the most people who do not have a bank account. This new payment method will allow Chinese citizens to become more involved in the mainstream economy. The US dollar still accounts for 88 percent of all international settlements, while China accounts for only 4 percent. This new payment method will aid in keeping settlement records up to date.