In a move possibly set to revolutionize the payment field, the Bank of China has started testing a unique offline payment system linked to SIM cards, specifically tailored for the digital yuan, or the e-CNY. This development signals China’s aggressive push towards a cashless society through their central bank digital currency (CBDC). The offline payment method allows transactions via mobile phone, using specialized a href=/?s=SIM+cards>SIM cards. For the transaction to take place, it is no longer a requirement for the phone to be on, just a simple close vicinity to the sale terminals. Who would have thought – you can still make a payment even with a dead phone battery!
< a href=/?s=China+Telecom>China Telecom and China Unicom are crucial partners in this endeavor with the Bank of China, contributing their technological prowess towards unlocking a new level of financial convenience. But every advancement is often accompanied by a drawback. Presently, these SIM card payment functions only work with designated Android phones within a few trial regions of China.
Following the same path, the People’s Bank of China launched a trial version of an e-CNY app last year, emphasizing the expansion of the digital currency’s use in its Belt and Road Initiative and cross-border trades. Imagine a future where digital yuan could be used for taxes and utility services payment.
Meanwhile, Hong Kong took a similar step with its e-HKD pilot program, exploring the possible links with the e-CNY for cross-border payments. Paints quite a picture of a future crypto-integrated global financial system, doesn’t it?
But there’s a dark cloud to this silver lining. McKinsey, operating in Russia, forecasted that traditional banks might lose up to 250 billion rubles in five years due to CBDC implementation. Conversely, retailers might reap profits of about $1.1 billion yearly. Is this a wake-up call hinting at the potential death of traditional banking?
In essence, as the digital ruble inches closer to reality, and countries such as China and Hong Kong forge new paths with their CBDCs, we could be looking at the dawn of an era where centralized digital currencies reign supreme. Is this tide of change inevitable? Is it for the better? These remain the million-dollar questions.
Source: Cointelegraph
