The first detailed document on the country’s centralised bank digital currency (CBDC) lays out the principles and vision for the Digital Yuan.
The People’s Bank of China (PBoC) has released its first white paper on China’s digital yuan, and the document explicitly lays out the background of the currency, its design framework and function, plus the progress it has made in its pilot programmes.
Known as e-CNY in the paper, the digital currency is intended to provide the public with unfettered access to cash for everyday transactions, and to ensure consistency as money becomes increasingly digitalised in the country.
While acknowledging that a digital yuan is needed to reduce costs and increase efficiency in payments, the currency is not meant to replace the renminbi (RMB). Instead, both monetary mediums will be issued together with the same legal status and economic value.
The white paper states that the main objective of the e-CNY is to increase ease of access to financial services, diversify electronic payments with fair efficient options for retail transactions, and build on cross-border initiatives outside of China.
Other than highlighting its objectives, safety and prudence in developing the digital yuan is also emphasised. The document expounds on security systems and encryption to create a resilient system, while addressing the concerns that a digital currency would have for financial stability by focusing on an orderly R&D progress.
Participants in the pilot trials have spent a total of 34.5 billion digital yuan (SGD $7.26 billion) as of June 2021. 20.87 million personal wallets and 3.51 million corporate wallets had been opened with a total transaction volume of 70.75 million. More than 1.32 million digital yuan trial sites have been opened since the end of 2019 for utilities, dining, transportation, shopping, and government services.
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