China should aim at becoming the first country to issue digital currency as part of its efforts to internationalize the yuan and lessen its over-dependence on the world’s dollar-dominated payment system, the People’s Bank of China (Chinese central bank) said.
The commentary appearing in China Finance, a People’s Bank of China run magazine, opined that the rights and capacity to offer and control digital currencies is set to become the ‘new battlefield’ among various sovereign nations. The article also claims that issuance and the circulation of virtual currency will alter the current international financial system.
The article argues that China should aim at becoming a first mover in the digital currencies space and calls for the acceleration of the development of the country’s CBDC.
“China has many advantages and opportunities in issuing fiat digital currencies, so it should accelerate the pace to seize the first track,” says the article.
Also, the article argues that data feedback from a Chinese central bank-issued digital currency (CBDC) would be vital for the development of a national monetary policy, which is imperative for economic recovery in the post-pandemic landscape.
The article also revealed that PBoC’s digital currency research outfit had filed approximately 130 patents related to crypto applications touching on issuance, circulation, and implementation.
The People’s Bank of China’s research institute was founded in 2015 to look at the feasibility and implementation process of digital currencies, to reduce the costs of circulating fiat currency and enhance policymakers’ grip in the money supply ecosystem.
Last month, various state-run Chinese commercial banks embarked on large-scale piloting of the digital wallet, which is a step closer to the highly awaited official launch of the digital currency. PBoC revealed last month that about 400 million people are involved in the piloting program for a digital yuan.
The Chinese central bank is looking forward to using the digital yuan during the 2022 Winter Olympic Games.
The article concludes that digital yuan can help in breaking the dollar hegemony in the international monetary system.