Editor's note: Keith Lamb is a University of Oxford graduate with an MSC degree in Contemporary Chinese Studies. His primary research interests are China's international relations and "socialism with Chinese characteristics." The article reflects the author's opinions and not necessarily the views of CGTN.

It's fair to say that China is at the forefront of becoming a cashless society. Today it's rare to see people in China pulling out metal and paper to pay for goods. If you do see this then no doubt you're witnessing a purchase from a certain demographic. Foreign tourists may use cash because they have no access to Chinese banking or payment software; the elderly may not understand new technology; and those from some far-away rural townships may lack the infrastructure to use a digital payment method.

However, the trend towards digital payments seems unstoppable. The convenience of using a phone for purchases, in China, means that wallets might soon become a museum item. Leaving the wallet at home means there is less risk of being robbed. If a phone does go missing, unfortunately, it can be tracked. Even if the missing phone doesn't get returned at least there are a variety of ways to secure your funds.

China is not resting on its laurels when it comes to digital payment. For the purposes of testing, this week China's central bank and the Beijing municipal government will issue 10 million yuan worth of its new e-CNY digital currency to Beijing residents who will be able to purchase items with it for one week.

Due to the massive number of payments that are processed every second through the Chinese payment system, blockchain technology which acts as an automatic ledger will not initially be used for its slow speeds.

However, as innovative blockchain technology progresses, I envisage it will eventually be added. Firstly, the argument for not using it is based on current technological issues rather than the rejection of the technology itself. Secondly, the use of blockchain technology which provides an immutable ledger of payments is too useful to be overlooked. Blockchain technology combined with China's e-CNY will automate finance, making smart contracts and automatized accounting using renminbi possible. Labor employed in pen-pushing professions like accounting will be freed up for more creative tasks.

Even without the blockchain, China's digital currency will provide the country with the ability to manage its economy more efficiently. A digital currency ensures more oversight and can cut down on graft. But it's not just about preventing corruption, which acts as a drag on economic growth. Digital currencies provide governments with more data to make suitable economic policies. On a micro level, local governments can drop money into wallets to stimulate specific parts of the economy or incentivize citizens to act in certain ways. This can be used to tackle poverty.

In China's efforts to wipe out extreme poverty, it wasn't just about handing out money to families and stopping there. In fact, this often doesn't work. Recognizing this, the Communist Party of China set out to find the root causes of poverty in China's countryside. Party members were sent to villages and people's homes so that they could experience the real-life difficulties.

With a digital payment system, grants can be given to families that could be programmed to be used specifically for food, clothing, education and vocational training, while spending on harmful products such as alcohol can be limited.

Internationally, China's digital currency could eventually help it out of a potential quagmire. The U.S. has been only too willing to throw its weight around to force the aging SWIFT system to comply with U.S. sanctions. With Washington talking about "extreme competition," it's not beyond imagination that the U.S. could use its weight to block China's ability to function in international markets.

Thus, China's digital currency offers the nation more flexibility and independence when it comes to international payment settlements and an eventual avenue to the greater internationalization of renminbi which would be commensurate with China's economic size.

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