Zhou Xiaochuan, a former governor of the People’s Bank of China (PBoC), stated that China’s planned central bank digital currency – Digital Currency Electronic Payment (DCEP) – has no plans to topple existing sovereign currencies.
Digital Yuan Not a Threat to U.S. Dollar or Euro
According to the South China Morning Post on Monday the former PBOC chief said that China’s digital yuan would not replace global sovereign currencies such as the U.S. dollar and euro.
Zhou made the statement while addressing attendees at the Shanghai Financial Forum. The former Chinese central bank head who is an advocate of the DCEP, said that the advent of the digital yuan would bring transparency to China’s cross-border trade.
Furthermore, The former PBOC governor said that the Chinese government was adopting a cautious approach in pushing the CBDC for international payment. According to Zhou,
“Some countries are worried about the internationalization of yuan. We can’t push them on sensitive issues and we can’t impose our will. We must avoid the perception of great power chauvinism.”
Zhou further explained that China did not want its digital yuan to suffer the same issues as Facebook’s Libra. Following the announcement of the Libra whitepaper back in June 2019, the Libra project has come under intense regulatory backlash globally. Most governments and regulatory bodies saw Libra’s model as a threat to the global monetary system.
Meanwhile, Zhou noted that China had no intentions of adopting Libra’s model. The ex-PBOC governor stated:
“If you are willing to use it, the yuan can be used for trade and investment,” he said. “But we are not like Libra and we don’t have an ambition to replace existing currencies.”
China Continues Extensive CBDC Trials
As previously reported by China has been at the forefront of the CBDC race. As part of efforts to test the digital yuan, places like Shenzhen airdropped 10 million yuan (~$1.5 million) worth of digital currency to 50,000 lucky winners back in October. Suzhou also announced a similar program earlier in December, distributing $3 million worth of digital yuan to 100,000 lucky winners.
In addition to testing the DCEP across different cities in China, the PBOC and the Hong Kong Monetary Authority (HKMA) are planning to trial the digital yuan for cross-border transactions. Meanwhile, casino operators in Macau are not excited about the use of the CBDC in the region.