Central bank’s effort on standards is promoting yuan’s international clout
While most of the world’s governments are still focused on defeating the novel coronavirus that has plunged the global economy into its worst slump since the Great Depression of the 1930s, central bankers are gearing up to tackle what could become one of the biggest financial challenges of the next decade: digital currencies.
The People’s Bank of China, the central bank, which started research on a digital yuan as far back as 2014, is leading the field and China is likely to be the first major economy to introduce a sovereign digital currency — it was beaten to the top spot by the Bahamas, whose central bank launched its Sand Dollar in October. The PBOC has already finished building the infrastructure for its Digital Currency Electronic Payment (DCEP) system and has been carrying out local testing in cities, including Shenzhen and Suzhou, although no date has been set for its official launch.
Draft revisions to the central bank law published Oct. 23 include clauses that provide the legal framework for the DCEP, giving the digital yuan the same legal status as the physical yuan. And China’s long-term plan for the economy through 2035, released after the Fifth Plenum of the Communist Party Central Committee that took place at the end of October, refers to “steadily advancing digital currency research and development.”