Even if the digital yuan gains popularity in China, its use overseas is not guaranteed.
Former People’s Bank of China (PBoC) Executive, Yao Qian, has discredited claims that China’s digital yuan is a government-issued monitoring tool. The ex-director of the Digital Currency Research Lab at PBoC said that surveillance was never the intention for the creation of the currency by the Chinese government.
At the International Finance Forum panel in Beijing, Qian went on to defend the digital coin saying that it was developed to counter the extensively used private-owned payment platforms such as Alipay. He also added that central banks are obliged to develop legalized fiat currency due to increased digitization.
Moreover, Qian said that there was the need for equilibrium in the currency’s role of maintaining users’ privacy and eliminating crimes such as money laundering, financing terrorism, and tax evasion. However, the coin would require to utilize smart contracts in order to reap the full benefits of digital monetization. Qian gave examples of banks that had made use of smart contracts for cryptocurrencies including the Bank of Japan, the Central Bank of Canada, and the European Central Bank.
Qian further stated that should the digital yuan and the digital dollar run on blockchain networks such as Diem and Ethereum, then Central Banks can provide cryptocurrencies without intermediaries. In addition, layered structures would make the digital currency favorable for bankless persons to accomplish financial inclusion for all.
Former PBoC Official: Digital Yuan Faces Great Challenges
His statement came as a hard refutation of arguments saying otherwise. One such argument is that of Jerome Powell, Head of the Federal Reserve who claimed that cryptocurrencies such as China’s Yuan would not be adopted in the US since they would give a pass to the Chinese government to view all transactions in real-time.
The controversial reasons behind the creation of the digital yuan have caused little adoption locally (only 3%) in comparison to mobile payment platforms such as Alipay (56%), Tenpay (39%), and others (6%). The Chinese government is faced with the challenge of initiating its use as most privately-owned enterprises fear their performance will be visible to state-owned competitors.
Furthermore, even if the digital yuan gains popularity in China, its use overseas is not guaranteed, Qian noted. China is still pushing to launch the digital yuan but its use overseas remains negligible.
Yao Qian is currently the director of the science and technology supervision bureau at the China Securities Regulatory Commission. He is famously known as the Chinese crypto dad due to his works on the crypto coin since 2014.