China to Focus on Domestic Use for Digital Currency, Says Former Central Bank Governor

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In Brief
  • China continues to expand testing of the digital yuan.

  • Set to focus on domestic use, with the goal of using at the 2022 Olympics.

  • Europe and U.S. governments are discussing plans to launch their own CBDCs.

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China will be looking to make use of their own digital currency domestically rather than globally, according to former governor of the central bank, Zhou Xiaochuan.

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Xiaochuan believes that the use of a Chinese digital currency globally would cause issues. He indicated that international use could affect monetary policy independence. 

The former governor of the People’s Bank of China elaborated on the potential criminal usage and how it needs to be prevented, when talking at the Boao Forum in China. 

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The digital yuan is being tested in China for the past several months. With pilot programs running across the country, China has not identified a timeline for the full roll-out of the digital asset.

However, Deputy Governor Li Bo mentioned that the central bank is looking at increasing the testing scope of the digital yuan. 

The central bank will be looking to test cross-border payments of the digital yuan for preparations towards the upcoming Winter Olympics scheduled for 2022. The digital currency will be offered as a payment method for cross-border payments for domestic and overseas users, including athletes, Li said. 

Digital yuan set for more trials

The digital yuan has been expanding its testing into new regions, with the Hainan Province being the latest region to test the digital currency

The central bank digital currency (CBDC) will be tested with members of the Sansha City government. The latest trial will run for two weeks, and looks to raise awareness for the digital yuan. The government is also offering an impressive 15% discount for every 100 yuan spent within the island. 

CBDCs discussion growing 

CBDCs continue to be a talking point between governments. The European Central Bank (ECB) has also been in discussions regarding a digital euro. ECB president Christine Lagarde has previously mentioned that the continent could launch its own digital currency. 

However, the president has also stated that the process could take up to four years to successfully implement. 

In the meantime, the United States has also been in discussions regarding CBDCs, with Treasury Secretary Janet Yellen stating that CBDCs could help those without access to the banking system in the future. 

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Ryan is a Fintech specialist with a passion for cryptocurrencies and blockchain adoption. A keen trader and investor in the market since 2016, he enjoys keeping up to date with the latest developments within the industry while finding the next 100x altcoin.

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