Zhou Xiaochuan, the former governor of the People’s Bank of China, said in a speech on Saturday that the digital yuan is designed to focus on transactions for people and merchants and not to replace SWIFT or weaponize the currency.
Fast facts
- Zhou, speaking at the 2022 Tsinghua PBCSF Global Finance Forum in Beijing, said the digital yuan is designed for retail transactions, and “may not necessarily be up to the job” if it was suddenly asked to undertake the role of cross-border payments.
- He added that the digital yuan may be adapted for cross-border payments in the future, but stressed that its focus will remain on retail applications and not be “used as a weapon.”
- Zhou cautioned that the world should guard against slipping back into the chilly relations that dominated trade during the Cold War era, as such an outcome would “bring damage to everyone”.
- China’s central bank digital currency (CBDC), also referred to as the digital yuan or e-CNY, has been rolled out under a pilot programme to 23 cities and recorded US$11.24 billion in historical transactions last year.
- In February, China’s central bank announced expanding the digital yuan pilot program to Hong Kong for retail payments, the largest offshore renminbi distribution center.
- The digital yuan has become a member of mBridge project to facilitate cross-border CBDC payments between China, Thailand, and the United Arab Emirates.
