Former head of the People’s Bank of China (PBOC), Zhou Xiaochuan, said the digital yuan will develop retail payments in China and prevent dollarization of the economy.
The President of the Chinese Finance Association said this at the Eurasian Forum. Zhou Xiaochuan said China’s central bank views government cryptocurrencies differently from the G7 countries, which include Canada, France, Germany, Italy, Japan, the United Kingdom and the United States. Regulators in these countries are focused on the challenges and threats posed by Bitcoin and other digital currencies, and even the unreleased Libra stablecoin.
China’s central bank focuses exclusively on using its digital currency for domestic retail payments. The agency is trying to prevent the popularization of the US dollar and is taking measures to reduce the use of the dollar for settlements in China. According to Xiaochuan, this is the main purpose of the digital yuan.
Last year, the US Treasury Department began to investigate the systemic risks of the Libra cryptocurrency project, which could affect the international economy. At the same time, the United States is in no hurry to launch its own digital currency. Recently, Federal Reserve Chairman Jerome Powell said that the digital dollar should not be launched until all risks associated with cyber attacks, fraud and money laundering have been eliminated.
Many central banks hold a similar position, believing that it is necessary to study the problems of government stablecoins more carefully. They can become a partial analogue of fiat money, which raises many questions related to legal and regulatory norms.
China’s approach to central bank digital currencies is indeed different from other countries. Instead of theoretical reasoning, the Chinese authorities prefer to conduct research in practice. Testing of the China Digital Currency-Based Electronic Payment System (DCEP) began in August, and this month, the NBK announced that a hardware wallet for the digital yuan is ready for testing.
