While everyone is talking about the Beijing Winter Olympics, China’s implementation of the digital yuan deserves greater attention from Taiwanese.
App stores last week made the digital yuan payment app available to Taiwanese smartphone users, enabling them to use it in traditional and simplified Chinese, as well as English.
Does the app contravene Taiwan’s national currency laws?
The issue is worthy of discussion, and countermeasures might be necessary.
The government’s policy is that local businesses allowing Chinese tourists to make purchases with yuan should be punished for breaching national currency laws.
If stores accept payments via WeChat Pay or Alipay, transactions must be denominated in New Taiwan dollars and processed by local banks under the supervision of the nation’s monitoring mechanism, which also applies to local eWallet apps.
Given the government’s tough stance on private Chinese eWallet apps, can it sit back and watch the Chinese government-run digital yuan enter Taiwan?
This is not a problem for Taiwan only. In coordination with the Winter Olympics, Beijing’s digital yuan app has gone overseas and is downloadable on smartphones everywhere in the world.
China said that its aim is to make the convenient payment tool available to all teams at the Games, but its broader strategic intent seems to be the internationalization of the digital currency.
To realize this goal, China originally planned to only accept digital yuan payments at Olympic venues, hotels, transportation, restaurants, department stores and each and every adjacent place, banning eWallet giants WeChat Pay and Alipay, and forcing foreign participants to use digital yuan.
After the plan caused controversy, Beijing reversed course, and also allowed Visa and cash payments.
However, China made it easy for foreigners to use the digital currency by introducing simplified procedures, and offered incentives and subsidies for its use, hoping that they would continue using digital yuan after returning to their home countries.
China has over the past few years tried every way to boost its currency’s international status to challenge the hegemony of the US dollar.
Beijing says that in the event of a foreign exchange blockade imposed by the US and Europe, it would still be able to trade internationally using digital yuan.
The digital yuan is knocking on Taiwan’s door. The National Communications Commission should evaluate whether app stores can legally offer the digital yuan payment app in Taiwan.
The central bank should also prepare countermeasures to follow up on the issue.
Honda Chen is a research fellow at the Taiwan Academy of Banking and Finance.
Translated by Eddy Chang
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