It has been just revealed the fact that the PBOC governor had something to say about China’s efforts to develop a CBDC. Check out the latest reports about this below.
China’s efforts to develop a CBDC
Zhou Xiaochuan, the former governor of China’s central bank, emphasized the importance of security, cost-effectiveness, and prevention of abuse as China develops its central bank digital currency.
During a forum in Beijing, Zhou stated that security has always been a crucial issue in finance, particularly in the context of currency.
He also noted that while technology costs have decreased over time, the cost of misuse has similarly decreased, making it imperative to prioritize security measures in the development of China’s central bank digital currency.
Zhou emphasized the importance of combatting money laundering and arms trading to prevent abuse, particularly the use of cryptocurrencies and stablecoins for payments in arms and drug trades. Therefore, it is crucial to focus on prevention efforts in these areas.
The People’s Bank of China, the central bank, has been conducting tests on its digital currency, known as e-CNY, and launched a pilot app in January 2022.
According to state media Xinhua, since the digital yuan pilots began in late 2019, the PBOC has expanded its trial to at least 26 locations in 17 provincial-level cities and regions, including Beijing, Shanghai, Shenzhen, and Suzhou.
E-CNY development
According to Zhou, China will maintain the e-CNY’s two-tier system.
The e-CNY is built on a two-tier structure, with the PBOC on the first layer for issuance, and commercial institutions on the second layer, including commercial banks, internet platform companies, and telecommunications operators.
This design ensures the “dynamic evolution” of the digital currency, which means it’s a system that improves service levels and fosters innovation through mutual competition, which can be particularly important for a large nation.
Zhou also mentioned that cross-border transactions is one of the important directions of exploration for CBDCs. “It involves both technology and systems, as well as policy orientation,” he said.
