Former Chinese Central Banker: Digital Yuan Will Focus on Payments and Retail Purchases in China

As the cryptocurrency industry evolves, more banks and financial institutions seek to find option s that they can offer, just to keep up.

The People’s Bank of China, for example, is working to implemented two types of central bank currencies, according to Zhou Xiaochuan. Xiaochuan recently spoke at the 2019 Caixin Hengqin Forum, adding that the new digital currency will be favoring use in international payments and domestic retail.

These two methods will allow consumers to use electronic payments with a domestic retail system and to handles international remittances for settlements involving financial institutions. Along with these statements, Xiaochuan added that China plans to continue on its work for a digital yuan to serve these purposes.

Xiaochuan, who served longer than any other head of PBoC and is lauded as one of the most influential financial experts in the country, outlined the risks that often are associated with CBDCs. Considering that fiat currencies operate as a “symbol of national sovereignty,” Xiaochuan remarked that any central bank should be careful in choosing the direction that they go. After all, making the wrong move could mean a credit crisis is on the bank’s hands.

The news announced by Xiaochuan comes just after the reported completion of China’s CBDC project, which happened in August this year. Just after, the central bank stated that there’s yet to be a launch date determined for the potential digital currency, as PBoC needs additional time to perform their research to prepare.

Towards the end of October, an executive with China Center stated that he believes that the central bank will be able to become the first to launch a successful digital currency.

Though the work on the apparent digital yuan project is still ongoing, the PBoC recently increased the severity of its crypto-related crackdown on operations in China. The bank issued a statement on November 21^st, stating that the bank was going to take actions on any exchange or other platform involved with the trading of Bitcoin and other cryptocurrencies. Unfortunately, the crypto market was hit hard by these policies.