People’s Bank of China Urges Faster Roll-Out of Digital Yuan

China must intensify efforts to roll out a sovereign digital currency, making it part of an independent financial infrastructure, said Chen Yulu, deputy governor of the People’s Bank of China. The South China Morning Post reports.

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The official’s comments relate to accelerating development [simple_tooltip content=’central bank digital currency’]CBDC[/simple_tooltip] among several major central banks, the publication says.

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Chen Yulu also noted that the digital yuan supports the implementation of China’s previously announced new economic strategy, anchored on boosting domestic demand. The new policy is designed to insulate the economy from rising geopolitical tensions with the United States and other countries.

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«We must build an independent and high-quality financial infrastructure … accelerate the pace of CBDC research and development, and in the course of pilot tests ensure that it is controllable and guarantees payment security,» the central bank official stressed.

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China began researching digital currency in 2014. The regulator stepped up work after Facebook announced plans to launch Libra.

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The People’s Bank of China is already testing the digital yuan payment system (DCEP) in four cities — Suzhou, Xiongan, Shenzhen and Chengdu.

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Earlier, Shenzhen authorities conducted the first distribution of digital yuan among residents. In the lottery took part more than 1.9 million residents of the metropolis — about 15% of the population.

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Earlier, the People’s Bank of China clarified that during the DCEP tests they conducted 3.13 million transactions totaling 1.1 billion yuan (~$162 million).

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China’s authorities are counting on the launch of CBDC to bolster the yuan’s position on the international stage and challenge the dollar’s dominance.

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The successes of China in digital currency development have spurred similar research in other major economies. The European Central Bank (ECB), the Bank of England, the U.S. Federal Reserve, the Bank of Canada, the Bank of Japan, as well as the central banks of Sweden and Switzerland, together with the Bank for International Settlements defined the main requirements for CBDC.

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The Bank of Korea in 2021 will begin the final stage of testing the digital currency. The Bank of France carried out the first successful CBDC test in May.

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The possibility of issuing a digital ruble has also been allowed by the Bank of Russia.

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How and why central banks are creating digital currencies (CBDC)

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