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China expands digital yuan trials

By Debabrata Das

08:35, 6 January 2022

An artist's rendering of the digital yuan
An artist’s rendering of the digital yuan – Photo: Shutterstock

China took another key step in the development of its sovereign digital currency after it allowed users in several more cities to download the e-CNY wallet app.

The app, which was only available for download via private links earlier, can now be downloaded through iOS and Android app stores. The app’s publisher is the PBOC Digital Research Institute, an arm of the People’s Bank of China (PBOC).

Several posts on Twitter pointed out that while everyone can download the app, new user registrations are limited to select cities. According to a report by the South China Morning Post, new user registrations will be limited to Shenzhen, Suzhou, Xiongan, Chengdu, Shanghai, Hainan, Changsha, Xian, Qingdao, Dalian and the venues of this year’s Winter Olympics hosted by Beijing.

Trials began last year

Data released by the PBOC last year show that as of 22 October, already 140 million personal wallets had been opened under the limited trial with transactions totalling CNY62bn ($9.72bn). The central bank had said in its year-end meeting that it would continue to accelerate the research and development of the e-CNY.

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China is expected to fully launch the e-CNY at the Winter Olympics later this year. According to Deutsche Bank’s chief China economist Yi Xiong, the e-CNY gives users option to hide identity from counterparties even as law enforcement can track illegal transactions, making it more difficult for e-commerce platforms to collect user data.

“The e-CNY will likely bring substantial changes to China's digital payment sector. It offers an entry point for China's big banks to break into a business segment that is currently dominated by big tech firms,” Yi said in a note last year.

Read more: Digital yuan will not drive internationalisation of the RMB

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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