What is China's DCEP?

The trial of China's new Digital Currency Electronic Payment (DCEP) began in April 2020, and it has since been gradually pushed out in key cities such as Shanghai, Chengdu, and Beijing. The DCEP is the Chinese Central Bank's digital payment and transaction system.

A digital currency is a money that exists in the form of digital data. It is like using ordinary money, but it does not have a physical form. The DCEP has "controllable anonymity" that is trackable, and users must download and register for an app on their smartphone. Other cryptocurrencies such as Bitcoin, Eth, etc. they are blockchain-based that are anonymous and decentralized. While Digital currency also uses a blockchain-based system but is centralized and, requires user identification. With this, China's government will be able to control the system, like freezing or closing an individual's account. For others, like the US this poses threats and, they called the digital currency "Warning to the world."

Why? Because China's government will be able to have surveillance with the private sectors, businesses, and individual citizens, and it can overcome the dominance of the US dollar internationally. It could make it easier for US-sanctioned countries to do more commerce with China. It will put the United States' capacity to impose international trade sanctions against Chinese corporations in jeopardy.

However, China, particularly talks concerning the internationalization of the DCEP system in Chinese media, are limited. And they mainly focused on domestic usage.

And finally, DCEP offers one significant benefit over other currency systems: its digital wallets can be used by smartphone without requiring an internet connection.

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