The Chinese government has begun distributing digital currency to its citizens, making it the first major economy in the world to do so.
According to The Wall Street Journal, 750,000 people have been chosen through a lottery mechanism and will be able to spend their digital Yuan in stores and online using a special software.
Merchants were fast to respond to the government’s new offer because app-based payments are already highly widespread in Chinese brick-and-mortar companies. According to a research published by Statista, Starbucks and the Chinese Communist Party are among those who have already accepted the digital Yuan.
Due to widespread digital payments and strict government surveillance, Chinese administrators already have access to a large amount of payment data.
Even though the country’s Central Bank has stated that it will minimise traceability and establish “controllable anonymity,” this knowledge of how individuals spend money will only grow with the deployment of the digital Yuan.
With the introduction of the digital currency, every Yuan in circulation will be available in either physical or digital form.
Analysts predict that the Chinese government will increase the amount of digital cash available in the future, reducing the amount of real currency available. Some speculate that China intends to convert the Yuan into a digital currency at some time.
