Former central bank governor urges early adoption
China is embarking on an ambitious plan to establish the digital yuan as the most stable global currency, according to Dai Xianglong, former governor of the People’s Bank of China (PBoC). By quickly adopting and leading the development of central bank digital currencies (CBDCs), China aims to internationalize the yuan and reduce its dependency on the US dollar.
Piloting the digital yuan
The PBoC is currently piloting its digital currency, known as the e-CNY or digital yuan. Dai Xianglong believes that establishing the digital yuan as a globally accepted and stable currency will help make the yuan a viable alternative to the US dollar.
As part of its goal to de-dollarize international trade and finance, China has been pushing for broader use of the yuan. Countries like Russia and Argentina already use the yuan for a large portion of their Chinese imports https://weibo.com/1988800805/NxwZNqXwy. Russian and Chinese officials suggest CBDCs in the form of the digital ruble and digital yuan could be used for transactions between the two countries as early as 2024.
Supporting yuan globalization
Chinese financial leaders see the digital yuan as an integral part of supporting the globalization and internationalization of the yuan. Plans are underway to explore the use of e-CNY in ASEAN nations and to integrate it within China’s Belt and Road infrastructure initiative https://t.co/tpkkFmBxQf.
Expanding use of the digital yuan
China is working to expand the use of its digital currency in countries like Singapore, Taiwan, Russia and Belarus through interoperable CBDCs for trade. In China’s Guangdong province, “experience zones” have been set up in downtown Guzhen and Zhongshan https://www.zsnews.cn/news/index/view/cateid/35/id/718337.html where people can try out e-CNY wallets and obtain goods at discount prices.
Encouraging user adoption
The PBoC and local government entities have collaborated to launch these experience zones near popular shopping centers and parks. Users can obtain free or discounted items like water, coffee and vending machine snacks using the digital yuan, encouraging adoption and experimentation with China’s CBDC.
The road to global currency dominance
If successful, China’s digital yuan pilot programs and gradual expansion could put the e-CNY in a prime position to become a widely used and accepted global currency, giving the yuan a competitive edge over the US dollar.