Where the People’s Republic of China is witnessing huge success in its initiative of Central Bank Digital Currency (CBDC), officials of the country are talking about the advantages of using a digital system in the country. Zhou Xiaochuan, the former Governor of the People’s Bank of China (PBoC) and the president of the Chinese Finance Association has shared his stance on the importance of this sovereign digital currency of the country. Zhou Xiaochuan is a great advocate for the digital currency plan of Beijing as well.
China does not plan to replace USD with Digital Yuan
As reported recently by the South China Morning Post, Zhou Xiaochuan spoke at the Shanghai Financial Forum about the advantages of using a digital system in the country and the role of the country’s centralized digital currency that it can play in cross-border trade. The usage of a digital system will make it possible the occurrence of currency conversions and payments in real-time.
He said that it is not included in the plans of the government of China to replace already existing fiat currencies such as the United States Dollar (USD) with its own central bank digital currency called Digital Yuan. He also drew a contrast between their sovereign digital currency and Libra (now has been rebranded as Diem) which is the cryptocurrency project of the social media giant Facebook. While comparing these two projects, he said that they are absolutely not like Libra.
“If the currency exchange is realised at the moment of a retail transaction, and there is oversight of that exchange … it brings new possibilities for interconnection… 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.”
Adding more to his discussion, he said that the country of China will make efforts to urge merchants and consumers from across the whole world to accept payments in Digital Yuan. And this is what the real focus of the country is, he said, instead of facing challenges of the monetary worlds and the foreign exchange.
Meanwhile, the testing of Digital Yuan is successfully going on without any problem. Reportedly, China has recorded huge success in the testing of its central bank digital currency in the City of Suzhou where around 20k transactions were conducted using the digital currency within the duration of just 24 hours.