China’s Digital Currency
Director Changchun Mu explained carefully the criteria for a CBDC in China. The digital currency is called the DCEP, e-CNY or the Digital RMB. Probably the digital yuan is more common.
He stated the criteria –
- Protect Monetary Policy and Sovereignty against crypto influence.
- Prevent dependence on Alipay and Tenpay (they have 98 percent of the payments market).
- Improve efficiency in payments.
- Promote financial inclusion (eg in rural areas).
He stated the following will apply –
- Ban crypto
- Make digital currency from the central bank legal tender
- Adopt a market based approach with partners.
- A multi-tiered system, the central bank distributes to the commercial banks; who then distribute to PSPs and telecom providers; who then provide retail services.
- Loose links to bank accounts (offline access possible and without a bank account).
- Observe local laws for cross-border payments.
- Assist the vulnerable in China.
The USA has expresed grave and significant concerns about China using a CBDC for surveillance. That was not talked about by Mu in the panel discourse.
China has had a strong interest in CBDCs and some fear China wants to take on the USA and the USD.