China is reportedly pressuring McDonald’s to accept its central bank digital currency, according to a recent report by the Financial Times that cites people familiar with the matter.
The fast food giant has already started testing the digital renminbi in Shanghai. However, the Chinese government wants McDonald’s to make it possible to pay with the CBDC at all of its locations throughout the country ahead of the Winter Olympics in Beijing that will kick off in early February.
Some other major U.S. companies, such as Nike and Visa, are also facing pressure, according to the report.
On-boarding these brands would help China bolster the adoption of the controversial digital currency, which has faced plenty of criticism due to privacy concerns.
Unlike Bitcoin, the digital yuan is entirely controlled by the government, meaning that it could block transactions or even make them disappear on a whim. Alex Gladstein, chief strategy officer at the Human Rights Foundation, is convinced that that the digital yuan will be used as a tool for ramping up surveillance:
The end of cash and the insta-analysis of financial transactions enable surveillance, state control, and, eventually, social engineering on a scale never thought possible.
Analysts predict that the digital yuan could reach a 9% share of China’s domestic payments by 2025.
China moved to ban Bitcoin mining earlier this year, a move that was likely meant to clear the way for a CBDC.
As reported by U.Today, McDonald’s has already adopted Bitcoin in El Salvador after the government made it mandatory for merchants to accept the largest cryptocurrency in early September.
Tanzania kickstarts plan to launch CBDC
- Tanzania plans to launch its CBDC
- The CBDC development is ongoing
- Digital assets are still banned in Tanzania
Central bank-backed digital currency has now become a phenomenon that every country wants to be associated with. Even though most of them oppose crypto, they see CBDC as a digital currency that can be regulated. Following the lead of countries in the region, Tanzania has announced that it is looming into the prospect of launching its central bank-backed digital currency. A Bloomberg report released earlier today said that Bank of Tanzania boss, Florence Luoga, confirmed the development.
The CBDC development is ongoing
The report mentioned that Luoga said the country already took a cue from Nigeria, which listed central bank-backed digital currency some weeks ago. In his statement, Luoga said that the development of its CBDC was already in the works, and it will be backed by its native currency, the shillings. The Governor also mentioned that the premier bank is looking into the certain use cases of the CBDC and strengthening its staff base. If the CBDC goes live, Tanzania will become of the few countries that have registered their CBDC since the start of the year.
Crypto is still banned in Tanzania
Analysts and market participants are presently looking to China as it continues to ramp up preparations for the launch of its CBDC. Asides from the digital currency being in the works for a long time, the country has been conducting several trials across states. Last year, a series of trials was conducted all over major cities with free packets given to citizens.
Since the beginning of the year, China has been conducting tests collaborating with partners to make it accessible to everyone. However, a major test of the digital currency is said to be coming at the Winter Olympics, which is scheduled to take place next year. Logga mentioned their CBDC idea was driven by the launch of the naira, Nigeria’s digital currency.
Presently, Nigeria is second to the Bahamas, whose CBDC went live in 2020. Like Nigeria, Tanzania has banned crypto trading since 2019. According to a decree passed in the country in 2019, digital assets are not recognized by any law in Tanzania. However, several reports point at the premier bank looming to overturn the ban after a recent statement by the country’s president. Back in July, President of Tanzania Suluhu Hassan told financial traders to expect the influx of crypto in the country.
Peru to partner with India, HK and Singapore central banks on a CBDC
The president of the Central Reserve Bank of Peru, Julio Velarde, announced that his country will be entering the global race to develop a central bank digital currency (CBDC).
At the Annual Conference of Executives with business leaders in Lima on Tuesday, he said:
“I think the payment system we are going to have eight years from now in the world is going to be completely different from the current one… Even the financial system will probably be quite different.”
Velarde stated that Peru will partner with the central banks of countries more advanced in their development of CBDCs including India, Singapore and Hong Kong. A CBDC is a digital form of a country’s fiat currency, issued and controlled by the respective nation’s central bank.
“We won’t be the first, because we don’t have the resources to be first and face those risks,” Velarde said, adding, “But we don’t want to fall behind. We are at least at the same level or maybe even further ahead than similarly-sized countries, although behind Mexico and Brazil.”
According to Atlantic Council, 87 countries (representing more than 90% of global gross domestic product) are now researching a CBDC, and seven have launched one. Comparatively, in May 2020, only 35 countries were considering developing a CBDC.
Although it doesn’t have a CBDC, El Salvador’s adoption of Bitcoin as a legal tender on Sept. 7 has put a renewed focus on digital assets in the region.
Mexico and Brazil are planning to implement CBDCs sometime before 2023, and the Bahamas already has a Sand Dollar CBDC.
As for Peru’s upcoming CBDC development partners, the Reserve Bank of India plans to launch a trial implementation of the digital rupee before the end of the year, but it is also taking its time to ensure the rollout goes smoothly.
“We are being extremely careful about it because it’s a completely new product, not just for RBI but globally,” Reserve Bank of India Governor Shaktikanta Das told CNBC in August.
Hong Kong’s Monetary Authority continues to explore the possibility of introducing a digital Hong Kong dollar in a bid to capitalize on potential benefits for retail trading across the city’s cross-border markets.
The Monetary Authority of Singapore has also shared plans for a privately developed retail CBDC under its “Project Orchid initiative.” They are all racing to catch up with China, however, which now has processed a total of 62 billion digital yuan, according to the head of digital currency at the People’s Bank of China.
India to Launch First Version of CBDC Next Year
India to become one of the first countries to implement CBDCs starting from next year.
The Reserve Bank of India is preparing for the launch of its first central bank digital currency in the first quarter of next year, according to central bank officials, Reuters report.
The pilot project could be launched by the first quarter of the next year, according to P. Vasudevan, chief general manager of the RBI Department of Payment & Settlement.
Central bank digital currencies are digital assets tied to the official currency of a country, or basically a digital version of a fiat currency. In the case of India, its CBDC will be called a digital rupee and tied to the national currency rupee.
Previously, the central bank was planning the soft launch of its first CBDC by December, but due to the absence of an official timeline or a roadmap committed by the Reserve Bank of India, the launch was postponed.
Currently, the bank is looking forward to addressing existing issues and underlying problems tied to the launch and maintenance of the first prototype of the CBDC. The implemented practices will be used from now on—that is why the regulator will take its time to create the best possible solutions for the realization of the initial concept.
Currently, existing issues and areas of research are the validation mechanism, the segmented use of digital currency and proper scaling. In comparison to already existing stablecoins on the cryptocurrency market, the Indian bank should be ready for a much wider area of usage and greater network load.
Vasudevan said the RBI was examining various issues related to which segment the CBDC should target, wholesale or retail, the validation mechanism and other issues, including distribution channels.