How Digital Yuan Enhances Financial Inclusion
Yuan is the national currency and most dominant means of payment in China. Like other fiat currencies, its usage remains subject to strict fiscal controls by the Chinese government and other international treaties. For instance, the regulations stipulate businesses and individuals must have bank accounts to transact Yuan. Besides, those institutions also limit transaction volumes, frequency, and even the countries with which their citizens can transact. To get started with trading digital yuan, visit the official website of Yuan Pay Group
The most significant setback to the traditional financial system is that several regions still lack access to banking facilities. That makes it extremely difficult for the populations in those areas to access essential financial services such as payment processing, deposits, and loans. China is currently one of the nations with the largest unbanked population. That has prompted the government to seek alternatives to enhance financial inclusion.
Digital Yuan is China’s strategic plan to bring financial services closer to its public and enable the unbanked population to participate in the mainstream economy. Here’s how the digital Yuan enhances financial inclusion.
All-inclusive Financial System
The traditional financial systems have for a long time marginalized the underprivileged. Private entities often prioritize the wealthy and powerful over the poor while running conventional banks and other financial service institutions. That makes it extremely hard for economically challenged populations to access financial services.
Digital Yuan unleashes a new era in the financial landscape, eliminating the typical bureaucracies in the conventional systems. Its users do not need to open bank accounts to send, receive and store funds. That locks out the many private players who have favored the rich and powerful. It denies the banks and other financial providers the exclusive rights to control the flow of money.
The digitized platform means anyone with a smartphone and internet connection can transact and store digital Yuan without relying on a third party. That allows even those without bank accounts to transact and access financial services like the rest of the world. That would enable the general public to participate and have more say in the mainstream economy. However, the digital Yuan is currently available only in China.
The People’s Bank of China has selected seven commercial banks and two online banks as wallets and currency exchange providers. Users only download and install the Yuan pay app to send and receive payments in digital Yuan. You cannot buy or transact digital Yuan via ordinary crypto exchanges.
Better Control of Money Flow
The usage of the Chinese national currency, the Yuan, is subject to various monetary policies, as set out by the PBOC and other international laws. However, monitoring the transactions conducted in fiat currency is highly challenging, even with proper regulations. That has impacted the increasing wealth gap, with the wealthy getting richer while the poor getting poorer.
Digital Yuan can help the Chinese government to address that issue by facilitating enhanced tracking and supervision of money flow across its economy. Digital Yuan runs on a centralized system, with the PBOC monitoring and controlling all its transactions. Unlike anonymous digital currencies, the Chinese government maintains a tight grip on all digital Yuan transactions.
The government’s ability to monitor all digital Yuan transactions enables it to conveniently follow the flow of money across its economy and related financial activities. That would facilitate better financial planning and decisions toward reducing the wealth gap and promoting financial inclusion.
Overall, the digital Yuan slightly differs from other virtual currencies such as Bitcoin. However, as discussed above, it also has a unique potential to promote financial inclusion.
