By
Bena Ilyas
May 7th, 2024
The economic growth of China in the past decade has made the potential push of the digital yuan into the global scene more of a necessity.
The Chinese government, through the People’s Bank of China (PBoC) is working on plans to build a global clearing network for mobile payments that will be settled in its Central Bank Digital Currency (CBDC), the Digital Yuan. As reported by Coindesk, citing an Op-Ed by the People’s Daily, the network will be a “breakthrough point” in the cross-border use of the digital currency.
China’s ambitions with the Digital Renminbi are high, and this is adequately backed by the PBoC championing efforts to push the new form of money into the national and international limelight. According to the referenced People’s Daily article, the Asian giant also wants to use the digital yuan to improve the monitoring and early warning capabilities regarding cross-border flows of the yuan.
The economic growth of China in the past decade has made the potential push of the digital yuan into the global scene more of a necessity. According to Song Ke, deputy director of the Institute of International Monetary Studies at the Renmin University of China, the internationalization of the digital yuan is also essential for the country’s continuous economic growth.
While the country’s officials in charge of the digital Renminbi project have been avoiding giving details about the internationalization efforts being pursued, China’s state planning documents like the Five Year Plan reveal that the global push of the national currency is one of the government’s goals.
Digital Yuan Test Is Advancing in China
The developmental efforts put into the Digital Yuan became pronounced back in the summer of 2020 when the People’s Bank of China began advanced trials for e-money. While the tests conducted have been largely limited to retail transactions in big cities like Beijing, and Chengdu, a total of about $5 billion has been processed through the digital yuan thus far.
The new form of money has now been integrated as a normal legal tender in many aspects. Coinspeaker reported earlier that more than 3,000 Automated Teller Machines (ATM) have been updated to allow for the conversion of fiat to digital yuan and vice versa. This feature as noted will help in further engrafting the Digital Yuan amongst its adopters.
Banks are also lending support for the mainstream adoption of the digital yuan as wallet creation for the new money by both State-owned financial institutions and private players have been underway for weeks now. Additionally, top tech firms including mobile phone manufacturers including Huawei, and Honor are designing digital yuan-compatible wallets for easy accessibility.
The PBoC is set to push the Digital Yuan for use at the 2022 Winter Olympics in Beijing in its first attempt to put it out for use by foreigners. Despite its internationalization efforts, the Chinese government has had to allay all fears that the push is geared toward undue surveillance.