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Former Governor of the People's Bank of China (PBOC), Yi Gang, recently concluded his five-year tenure by shining a spotlight on China's digital yuan, extolling it as a pioneering force on the global stage. Yi, 65, was officially succeeded by Pan Gongsheng, 60, as the head of the PBOC at the end of the previous month. In a series of lectures at Tsinghua University in Beijing on July 5, Yi dedicated the final two discussions to the digital yuan, praising its potential impact and significance.
Addressing the audience, Yi Gang highlighted the digital yuan's pivotal role in retail payments, showcasing its ability to usher in substantial improvements in efficiency, redundancy within the payment system, and a noteworthy advancement in the realm of inclusive finance. As the e-CNY, China's digital currency, continues to gain traction, it has the potential to revolutionize an array of domestic retail transactions, extending its utility even to foreign visitors. Furthermore, Yi emphasized that the digital yuan's reach extends beyond national borders, showcasing its potential for overseas usage.
At the heart of China's digital currency initiative lies the aspiration to bolster domestic chip self-sufficiency and promote green finance initiatives. Yi's tenure at the PBOC has been marked by these progressive endeavors, in addition to steering the central bank through the economic challenges posed by the global pandemic, tackling financial risks, and exercising effective inflation control.
While Yi has now transitioned to his new role as the president of the Chinese Society for Finance and Banking, his legacy continues to shape the future of China's financial landscape. As a deputy director under the government advisory body, the Chinese People’s Political Consultative Conference, Yi remains actively engaged in shaping the nation's economic trajectory.
With the reins now handed over to Pan Gongsheng, the PBOC is steadfastly committed to the ongoing research and trials of the digital yuan. The central bank's midyear work conference affirmed its dedication to advancing the digital currency agenda, concurrently focusing on fortifying the nation's financial infrastructure and services.
China's journey into the realm of central bank digital currency commenced earlier than most major economies, with the establishment of a research institute under the PBOC back in 2016. The pioneering efforts of the PBOC laid the foundation for subsequent developments in the sphere, subsequently echoed by other central banks around the world.
At its core, China's digital yuan employs a two-tier centralized framework, primarily tailored to facilitate seamless retail payments. The PBOC has orchestrated pilot programs across 17 provinces, showcasing the potential and viability of the digital currency concept. A critical element of the digital yuan's design is the preservation of anonymity in payments, effectively addressing concerns related to privacy.
Yi Gang also elucidated the PBOC's strategy in managing the digital yuan's role as a store of value. By carefully controlling its store of value function, the PBOC aims to circumvent potential challenges, thereby ensuring a smooth and stable operation of the digital currency system.
The PBOC is keenly focused on preserving monetary sovereignty in the cross-border application of the digital yuan, aiming to streamline operations, enhance efficiency, and significantly lower costs associated with international transactions.
The digital yuan's real-world adoption is gaining momentum, with approximately 891.86 billion yuan (US$124 billion) expended across a staggering 750 million digital yuan transactions as of March. Over 100 million e-wallets have been opened through the digital yuan app, collectively amassing a total balance of 8.67 billion yuan.
Crucially, Yi Gang emphasized the importance of a market-oriented approach in promoting the e-CNY, underscoring the digital currency's coexistence with physical cash for an extended period. This approach aligns with the varied needs and preferences of individuals, ensuring a seamless transition for both the government and the general populace.
China's digital yuan has made remarkable strides in various payment scenarios, spanning from routine shopping transactions to utility bill payments, payroll processing, and even cross-border exchanges. In a significant development, a new e-CNY exchange machine was unveiled in Sanya, Hainan, enabling the seamless conversion of 20 different currencies into digital yuan. This move opens doors for foreign visitors to seamlessly experience China's burgeoning mobile payments ecosystem.
In conclusion, Yi Gang's focus on China's digital yuan during his final lectures reflects his deep-seated belief in the transformative potential of this digital currency. Under his guidance, China has emerged as a global leader in central bank digital currency initiatives, showcasing the nation's commitment to innovation, financial inclusivity, and technological prowess. As Pan Gongsheng assumes his role at the helm of the PBOC, the digital yuan's journey continues to unfold, poised to reshape the dynamics of financial transactions and pave the way for a new era of economic progress.
By fLEXI tEAM