China’s E-yuan Was Created With Shopping in Mind, PBOC Ex-Governor Zhou Xiaochuan Says(Yicai Global) April 18 -- China’s digital sovereign currency was developed for use in retail transactions, replacing physical cash, and not to replace the US dollar, according to Zhou Xiaochuan, former governor of the People’s Bank of China.
China created the e-yuan to replace M0, or cash in circulation, Zhou said at the annual Tsinghua PBOC School of Finance’s Global Finance Forum on April 16, indicating that its application will focus on the retail sector and offer greater convenience through mobile devices.
“It’s possible that the e-yuan will be used in cross-border payments,” he said, “but it will likely focus on cross-border retail.”
China’s central bank does not have a strong desire to use the digital yuan in financial market transactions, said Zhou, who is now chairman of the China Society for Finance and Banking.
Zhou was governor of the People’s Bank of China from December 2002 to March 2018, making him its longest-serving head.
Cross-border payments involve a number of issues, especially exchange rates, that international organizations find hard to solve, Zhou said, adding that it is impossible to regulate the digital currency while in the process of development and innovation.
The focus should be on the actual application of the digital yuan rather than on its use in particular transactions, Zhou said, pointing out that it is a great test to see if ordinary people are willing to use it or not.
Large tech and fintech companies have bright prospects in the payment industry but must be honest and faithful and improve their quality to reach high standards if they want to participate in the digital currency or payments system, Zhou said.
Issuing currencies is a sovereign matter and has no international standards, Zhou noted, adding that countries have their own rules, though everyone hopes international organizations will have a special role in guiding and establishing standards for cross-border payments. But there is no legal requirement that there must be standards before it can be done, he said.
Editor: Futura Costaglione
