Benefits of digital Yuan to the Chinese government


The Chinese government has wholly focused on creating a digital currency that is completely centralized, and the government has control over that digital currency. It is correct to say that it is another form of cryptocurrency but does have government interference in its monetary affairs. It is evident through that the Chinese government wants to move citizens toward using digital Yuan and decrease fiat money. Digital Yuan will benefit small-scale industries in China and small retailers who have to pay relatively high fees to transfer funds overseas. Citizen of China can move their funds from one source to another with a minimum amount or a minimum cost than ever before.

The government will have several benefits from launching the digital Yuan. First, the Chinese government can control the flow of money in the retail markets domestic flow of funds from one source to another source can easily be detected. Second, the cases like fraud and money laundering can be controlled to a great extent. Third, the government of China can reduce the paper burden on the bank employees as all the money is processed through digital channels, and there is no need to record transactions manually. It is seen that China is pushing its economy towards complete digitalization and wants to decrease the use of Fiat money in domestic and international markets. Also, the Chinese government is focusing on creating an alternative stable currency that can be accepted other than the US dollar.

Several benefits of digital Yuan to the Chinese government: –

Traceable: –

One of the foremost benefits of the digital Yuan to the Chinese government is that all the money flowing through the digital Yuan is traceable by the government. Government can notice the flow of money in a specific direction; if the money flows in a particular order, the government can control the flow. The government can even notice people’s investment plans, purchasing things, and saving money for their future use. Therefore, the centralized currency is entirely under the control of the Chinese government, has to print less physical cash, and the requirement for manual recording of transactions can be diminished.

Digital Yuan will also help decrease the cases of fraud and money laundering because the money flows through centralized channels, which are assumed as hackproof channels. In addition, it will create trust among the citizens of China, and people will be more liable to use digital Yuan than any other digital currency.


One more benefit of launching the digital Yuan is that it will foster China’s economic growth, and China’s Tax collection system will become more digitalized. The citizens of China cannot save tax illegally with the use of digital Yuan because the flow of money is under the control of the government of China. The management and storage of money will become cost-efficient, hassle-free and away easy from paper money.

Digital Yuan will also render faster transaction speed to retailers, banks, and other financial institutions, and even overseas transactions can be settled in minutes. In contrast, the traditional banking system could take five to six working days to transfer funds from one country to another.

If a currency offers several benefits, then people are automatically attracted to the use of digital currencies.

Cost efficient

One of the most significant benefits of using the digital Yuan is that it will make transactions cost-efficient. Government can also reduce its cost of storage, printing, transportation, and disposal of physical money. These are some of the prices that comes with printing physical money, and the distribution system of physical money consumes both time and money.

Another benefit to the government is that some businesses do not shut down over a year, and sometimes they need to transfer funds even when there is a bank holiday. The bank can offer short-term liquidity to its digital Yuan users even when there is a national holiday or event. 

The first thing that comes to mind when we hear about digital currency is that the involvement of banks and visits to the bank can be significantly reduced and allow access to payment at a minimum cost.

The transaction cost is increased through the multiple intermediaries in between, but the digital Yuan will bypass all the intermediaries like brokers and exchanges. However, the Chinese government is giving a monopoly to two banks in China to process digital payments from user to bank account and vice versa.

Final thoughts

These are some of the benefits offered by the digital Yuan to the Chinese government. The project still needs to be completed, and it will take time to be wholly accepted worldwide and to achieve the assumed height by the government of China. Launching digital money and controlling the flow of it in the domestic markets can also hurt the economy’s growth because some investors do not refer to government interference in their money affairs. Therefore, there might be a need to clear some technical issues of the digital Yuan.

What do you think?

Written by Joshua White

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