China’s Central Bank Digital Currency Trial Nearing Completion, Says Former Governor
China is making significant progress in its central bank digital currency (CBDC) trial, with the final stages “not very far away,” according to Zhou Xiaochuan, the former governor of the People’s Bank of China (PBoC). Xiaochuan stated that up to 90% of retail payments in the country have already been digitized. He also highlighted the potential for CBDCs to facilitate cross-border payments, which he sees as a major business opportunity for central bankers.
China’s Digital Yuan Development
The development of China’s digital yuan, also known as e-CNY, began in 2014 when a task force was established to study digital fiat currency. In November 2023, PBoC officials announced the “Money Bridge” project, which will utilize a proprietary blockchain for services such as foreign exchange and payment settlements, wallet administration, and privacy protection. The Digital Currency Institute has partnered with several central banks, including those in Hong Kong, Thailand, and the United Arab Emirates, to explore the applications of CBDCs in cross-border payment systems.
U.S. Attempts to Restrict Interactions with China’s CBDC
Meanwhile, policymakers in the United States are taking steps to prevent U.S. financial service operators from engaging with China’s CBDC. Senator Rick Scott introduced the Chinese CBDC Prohibition Act in November 2023, which aims to prohibit post offices, remittance firms, peer-to-peer crowdfunding platforms, and other money services businesses from facilitating transactions involving China’s digital yuan.
Hot Take: China Nears Completion of Central Bank Digital Currency Trial
China is nearing the end of its central bank digital currency (CBDC) trial, according to the former governor of the People’s Bank of China. The country has made significant progress in digitizing retail payments, with up to 90% already being conducted digitally. The potential for CBDCs to facilitate cross-border payments is seen as a major opportunity by central bankers. China’s digital yuan development began in 2014 and has recently announced the “Money Bridge” project utilizing a proprietary blockchain. However, the United States is taking steps to restrict interactions with China’s CBDC through the Chinese CBDC Prohibition Act introduced by Senator Rick Scott.
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