China’s new sovereign digital currency is not meant to replace the US dollar as an international reserve and payment currency, and is instead aimed at meeting the needs of the internet era, especially for retail payments.
That’s according to the former head of the People’s Bank of China, Zhou Xiaochuan, who also said that the digital yuan should not be closely linked to the yuan's internationalization, which depends more on policy decisions and opening up, instead of technical factors.
Zhou, who was speaking at a finance forum in Beijing on Saturday, also denied claims that the central bank wants to replace third-party payment with the digital currency. He explained that while the regulator has organized the research and development of the digital yuan, major commercial banks, telecom companies, and several major third-party payment firms joined based on their achievements.
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"We are on the same boat," Zhou said as quoted by CGTN. "Not in a conflict about replacement,” he added.
Last year, the People’s Bank of China revealed plans to have its sovereign digital currency ready in time for the 2022 Winter Olympics. The digital yuan was projected to replace cash in circulation. Limited trials have already been underway in major cities across the country. China is the first nation in the world to test digital currency on a national level.
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