China’s Central Bank Commits To The Digital Yuan

By Boris Dzhingarov

The PBoC (People’s Bank of China) declared in an official notice on April 4 that it will “undoubtedly further its research and development of the national digital currency with enhanced top-down design.” The mentioned notice summarizes the National Currency Gold Silver and Security Work Video and Telephone Conference, which took place on Friday, at the request of the bank’s vice governor, Yifei Fan. A goal of this annual meeting was to lay down the top priorities for the future.

This is not the first time the digital yuan is mentioned or the DCEP (Digital Currency Electronic Payment). However, the difference is that this time it is obvious that the bank is much more invested in this project.

During the 2018 meeting, a representative of the bank said that the bank is pursuing the digital yuan at a steady pace. Last year there was a mention of accelerating the process after taking a look at cryptocurrency trends.

The initiative is old and has been in the works for years now. Even so, it seems because of the coronavirus-related problems connected with physical banknotes, the process will be accelerated. It was on February 15 that the bank declared it will store cash for up to 14 days before taking it in and that banknotes will be disinfected. Then, we also saw an extra 600 billion yuan put into circulation.

The BIS (Bank for International Settlements) said that the current pandemic will encourage the adoption of digital payment solution and will inspire industry leaders to talk more about the digital currencies. Conversations between banks have been going on for a while now.

The PBoC tries to push the DCEP and to reform the system that they use to withdraw and issue cash, together with other issues that aim to better manage the circulation of cash. Some other priorities that were highlighted included strengthening the fight against counterfeit money and testing different programs with the purpose of managing larger quantities of cash. The notice also mentioned that officials representing major commercial banks (state-owned) also participated in the meeting.