The digital yuan, which is controlled and issued by the People’s Bank of China, is what’s known as a central bank digital currency (CBDC). The central bank calls its project the Digital Currency Electronic Payment or DCEP, though it has remained quite tight-lipped about its development.
Central bank digital currencies are unlike cryptocurrencies such as bitcoin, or even the Facebook-backed digital coin Libra . That’s because they are controlled and issued by a central bank.
Bitcoin, which recently hit a record-high price , is decentralized — that means it’s not controlled or issued by a single entity.
Central banks are looking closely at digital currencies because they promise features such as more efficient cross-border payments as well as moving countries toward cashless societies.
The BIS, a group of central banks, said earlier this year that 80% of the world’s central banks “had already started to conceptualize and research the potential for CBDCs.”
China’s central bank appears to be the most advanced in its rollout of a digital currency compared to other major economies, though it has stopped short so far of a nationwide rollout and has instead focused on pilot projects.