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E-CNY designed for retail transactions, not to take place of dollar, expert says
Last Updated: 2022-04-18 07:09 | China Daily
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China's e-CNY, also known as the digital yuan, is designed for retail transactions for the convenience of people and merchants, rather than to replace the US dollar, said Zhou Xiaochuan, president of the China Society for Finance and Banking.

"The People's Bank of China stressed that it conducted research and development of the e-CNY as a substitute for cash in circulation, showing that the PBOC expects the use of the e-CNY to be primarily focused on retail payments, especially bringing more convenience to people with the help of internet and mobile internet terminals," said Zhou, who is also former governor of the PBOC, China's central bank, at the 2022 Tsinghua PBCSF Global Finance Forum on Saturday.

"We don't exclude the possibility that the e-CNY may be used for cross-border payments in the future but I estimate that it will still focus on retail transactions, such as cross-border retail transactions," he said, adding that the digital yuan will not be used as a weapon.

At the forum, Zhou reiterated world trade patterns should avoid slipping back to what they were during the Cold War era.

"If global financial payment or messaging systems slip into some kind of a Cold War pattern, it will bring damage to everyone," he said.

The relevant authorities should take into account that if SWIFT, the world's leading provider of secure financial messaging services, is heavily used as an instrument to impose sanctions, others can definitely find other financial messaging channels to complete trade, he said.

However, he acknowledged that SWIFT has advantages in terms of efficiency, market size, security, confidentiality and automated processing, with a large number of financial institutions connected to it.

If another financial messaging channel is created to bypass SWIFT, there will be a transitional period and tons of work to do. During the transitional period, the efficiency of trade will be affected, he said.

The PBOC announced on April 2 that its e-CNY pilot program will be expanded to another 11 cities, including Tianjin and six cities in Zhejiang province which will host the Asian Games later this year.

By the end of 2021, China's digital yuan transactions reached about 87.57 billion yuan ($13.75 billion), with 261 million personal wallets opened, according to the PBOC.

Third-party institutions should move toward high standards if they want to participate in the digital currency pilot program, rather than trying to avoid following these standards in a crafty or dishonest way, Zhou said.

(Editor:Fu Bo)

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E-CNY designed for retail transactions, not to take place of dollar, expert says
Source:China Daily | 2022-04-18 07:09
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