Context: With cyber yuan, the Chinese language authorities has created a digital foreign money managed by its central financial institution,  which will issue the new electronic money.

• A thousand years ago, when money meant coins, China invented paper currency. Now the Chinese government is minting cash digitally, in a re-imagination of money that could shake a pillar of American power.

Key Points

• It is expected to give China’s government vast new tools to monitor both its economy and its people.
• By design, the digital yuan will negate one of bitcoin’s major draws: anonymity for the user.
• A cyber yuan stands to give Beijing power to track spending in real time, plus money that isn’t linked to the dollar-dominated global financial system.
• The digital yuan may help with this initiative, making it easier to encourage users in other countries to use the yuan.

Digital Currency

• It is a payment method which exists only in electronic form and is not tangible.
• It can be transferred between entities or users with the help of technology like computers, smartphones and the internet.
• Although it is similar to physical currencies, digital money allows borderless transfer of ownership as well as instantaneous transactions.
• It is also known as digital money and cybercash.
• E.g. Cryptocurrency

Cryptocurrency

• It is a digital or virtual currency that uses cryptography for security.
• Cryptocurrencies use decentralized technology to let users make secure payments and store money without the need to use their name or go through a bank.
• They run on a distributed public ledger called blockchain, which is a record of all transactions updated and held by currency holders.
• The most common cryptocurrencies are Bitcoin, Libra, Ethereum, Ripple, and Litecoin.