A former People’s Bank of China (PBoC) official has defended China by clarifying its motivations behind developing a digital yuan central bank digital currency (CBDC).
Yao Qian, formerly the director for the digital currency institute at the PBoC, denied that the digital yuan has ever been planned as a surveillance tool. According to reports, he clarified that China decided to develop the digital yuan as a countermeasure against increasingly popular “private payment platforms.”
Digital yuan concerns
Yao made these comments while on a panel at Beijing’s International Finance Forum.
His remarks argue against assertions made by United States Federal Reserve Chair Jerome Powell in a press conference on April 28. Powell indicated that such a digital currency would not work in the U.S., claiming that the digital yuan allowed the Chinese government to “see every payment that’s used—for which it is used in real-time.”
Yao insisted that this was not the case. arguing that a CBDC is necessary for the central banks to innovate fiat currencies amid the rise of digital ones.
The digital yuan has been the subject of much debate since its initial announcement. Many have questioned the effects it will have on industries, such as gambling operators in Macau.
Officials in the U.S. have also voiced concerns that it could undermine the dollar’s dominance. In April, reports revealed that the Biden administration was keeping an eye on the CBDC’s development. However, in May, Hester Peirce, Commissioner at the U.S. Securities and Exchange Commission (SEC), stated there digital yuan will not eclipse the dollar.
The world gravitates towards CBDCs
China is hardly the only one with its hands in CBDCs. May has been especially eventful. Nations such as Canada and South Africa have continued to push towards their own respective digital currency releases. Meanwhile, Sweden’s central bank has already started working towards its next CBDC testing phase. Furthermore, South Korea’s central bank has put plans in place to test its own digital currency.
In all, according to a report from the Bank of International Settlements, 80% of the world’s central banks were already conceptualizing and researching CBDCs earlier in the year. The report elaborated further to state that 40% of them were building proofs-of-concept, and 10% were deploying their pilot projects.