Image: EPA-EFE
The world has turned both anticipatory and cautious eyes towards China’s central bank digital currency (CBDC), the DCEP, as it progresses even further with its trials, striving hard to make its digital currency viable for use nationwide soon. Governments and central banks across the globe are watching China’s CBDC development, so they can possibly use it as a standard or benchmark to compare their respective future CBDCs to. Underpinning that is also some healthy amount of wariness, as the emerging superpower’s digital yuan, when it is finally launched, may likely have adverse impacts on the global economy.
Zhou Xiaochuan, who ended his term as governor of the People’s Bank of China back in 2018, spoke at the Shanghai Financial Forum recently to differentiate the digital yuan from the ambitions of other private stablecoins, namely Libra, according to the South China Morning Post. Not only that, Zhou clearly stated that the digital yuan was not created to compete with already existing and established fiat currencies, such as the USD or Euro.
“If you are willing to use it, the yuan can be used for trade and investment. But we are not like Libra and we don’t have an ambition to replace existing currencies,” he said. “Some countries are worried about the internationalisation of yuan. We can’t push them on sensitive issues and we can’t impose our will. We must avoid the perception of great power chauvinism.”
Zhou said that the focus of the digital yuan was on easing cross-border remittance difficulties and inefficiencies, and increasing the interconnectedness of payments with the help of the DCEP.
China’s extensive digital yuan trials in Suzhou commenced last Friday, and after initial observation, officials mentioned that China is unlikely to rush into launching the DCEP and that it may not even be fully ready for launch by the end of 2021. Instead of rushing head first into the race, China is proceeding with extreme caution, but is also enjoying the added benefit of having almost no competitors, and none which are as far along as China in its progress.
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