A former head of China’s central bank believes the digital yuan will not disrupt the order of the global monetary system.
Zhou Xiaochuan told attendees at the Shanghai Financial Forum that China’s digital currency electronic payment (DCEP) initiative should not be perceived as “great power chauvinism,” according to a report published Sunday by the South China Morning Post.
According to Zhou, the DCEP would encourage cross-border trade and increase the yuan’s international status, rather than threaten the currencies of other countries.
“We are not like Libra and have no desire to change existing currencies,” he said, referring to the Facebook-launched stablecoin, which recently went through a name change as Diem and is scheduled to launch early next year.
DCEP is China’s official yuan-backed token to be released by the people’s Bank of China (PBoC) for centralized digital payments. Although several countries ‘ central banks have begun exploring and developing digital currencies, China’s efforts represent the most advanced effort in the field, as it has the potential to be used by billions of people.
The former PBoC chairman said the digital yuan could be used for trade and investment if people were “willing.” Zhou quoted:
“Some countries are concerned about the internationalization of the yuan. We cannot force them on sensitive issues and impose our will.”
China hopes to persuade consumers and overseas traders to eventually accept digital yuan payments. Zhou said China has learned lessons from the criticism it has received from regulators and governments since Libra first appeared in 2019.
DCEP will offer an alternative to credit cards or payment services such as Alipay and WeChat Pay. According to Zhou, these services can already manage foreign exchange transactions, but “they are often not real-time or transparent.”
“Currency exchange decouples if a retail transaction is carried out instantly and there is oversight of that transaction… bring new possibilities for interconnection,” Zhou said. With digital yuan “the problem of cross-border money transfer can be easily solved.