In the next step to promote the use of the digital yuan, the central bank said it will work on privacy protection and crime prevention, and conduct a “deep investigation” of the impact on the country’s financial system. Tests have already been held in Shenzhen, Suzhou, Xiong’an, Chengdu, Shanghai, Hainan, Changsha, Xi’an, Qingdao, Dalian, and the 2022 Winter Olympics closed loop.
China will add Tianjin, Chongqing, Guangzhou, Fuzhou, Xiamen, Hangzhou, Ningbo, Wenzhou, Huzhou, Shaoxing and Jinhua to the list of trial cities. Beijing and Zhangjiakou, the co-host cities of the Winter Olympics and Winter Paralympics, will continue to use the digital yuan after testing within the Games’ venues ends.
Across China, more than 20.8 million people have opened a virtual wallet that stores the digital currency and have made more than 70.7 million transactions in total, the People’s Bank of China said. The central bank said it will continue to test and develop the system, but will not set a timetable for its official implementation.
So far, the central bank has basically completed the research and development of the design and function of the digital currency, according to the white paper. Going forward, the bank said it will “further expand the scope of the tests and the scenarios they cover.”
China’s push to develop a digital yuan accelerated the movement globally, prompting more central banks to consider developing virtual currencies.
At the same time, he has also raised concerns that China’s digital currency could challenge the US dollar’s status as the world’s dominant reserve currency, even as Chinese officials say it will be used primarily for domestic retail transactions.
China began testing its digital currency in late 2019 and has since expanded the test to 11 cities and provinces, according to the white paper. The trials have increased the public’s understanding of how it works.
The digital yuan is a retail central bank digital currency (CBDC) that will circulate to the public, as opposed to a wholesale CBDC issued to commercial banks and other institutions for high-volume transactions, according to the white paper.
Technically, the digital yuan can be used for cross-border transactions, but for now it will be used primarily for domestic retail purposes, according to the white paper. The People’s Bank of China will explore needs-based cross-border trials abroad and respect other countries’ monetary sovereignty in the process.
Source: Ambito
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