People’s Bank of China Urges Widening the Use of Digital Yuan

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Digital Yuan
  • The PBOC has called on to widen the use of the digital yuan.
  • e-CNY can simplify cross-border transactions for foreigners.
  • The government is running a series of initiatives called ‘red envelopes’ to promote the use of e-CNY.

The Public Bank of China (PBOC) has called for better integration between digital yuan (e-CNY) and traditional electronic payment tools. The financial institute said the move will increase convenience for users of its central bank digital currency (CBDC).

In an attempt to encourage more citizens to utilize the digital yuan, the Chinese government has been running a series of initiatives called “red envelopes,” in which millions of dollars worth of e-CNY is distributed to encourage its use among the masses.

According to a recent article, The e-CNY may assist in internationalizing the yuan in several methods. It may make it simpler and cheaper for foreigners to make cross-border funds while making it difficult for the US to dampen these transactions over geopolitical functions.

An economics professor at Cornell University, Eswar Prasad, opined, 

The PBOC wants to make sure that a digital version of Yuan is relevant in terms of making sure central bank money remains attractable at the retail level and also to make sure that payment space is not dominated by two major payment providers. But the use case for a CBDC is actually pretty weak in China.

Quoted by state-owned media network Xinhua Net, to regularize the use of digital yuan, regulations, and standards in areas such as digital identities, Bluetooth, and QR codes should be linked to enhance the interconnectivity of various types of payment tools

The deputy governor of China also emphasized improving the security of digital yuan use via upgrading relevant technologies to avoid leakage of user-information and eliminate data security risks.

Apart from CBDCs, the China Energy Administration (CEA) announced earlier this year that it is set to investigate the use of blockchain-based power trading platforms to promote energy trade between self-contained power generation units and other national networks.

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