Former head of China’s central bank: the digital yuan does not threaten global currencies

China’s national digital currency will support Beijing’s efforts to promote the yuan as an international currency, but it is not intended to replace globally recognised fiat money—the dollar and the euro. This was stated by former central bank governor Zhou Xiaochuan, according to the South China Morning Post.

In his view, one of the main advantages of using the digital system is that it allows both payments and real-time currency conversion. This could be a boon for cross-border trade, said Zhou Xiaochuan, who left the post of governor of the People’s Bank of China in 2018.

“But we are not like Libra, and we have no ambitions to replace existing currencies,” he stressed.

Many financial regulators around the world are wary of Facebook’s Libra-based payments project, previously renamed to Diem. Concerns relate to potential threats to financial stability and monetary sovereignty.

Zhou Xiaochuan noted that China has learned from the Libra/Diem reaction and therefore adheres to a cautious approach. Rather than challenging the regulatory framework and currency systems, Beijing wants to gradually persuade consumers and foreign traders to accept payments in yuan.

“Some countries are concerned about the internationalisation of the yuan. We cannot push them toward sensitive issues and impose our will. We must avoid the perception of great-power chauvinism,” Zhou Xiaochuan says.

Earlier, Matthew Graham, head of the Sino Global Capital blockchain startup, said that the digital yuan threatens the dollar’s global hegemon.

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