China is expanding the test phase of its Digital Yuan trials to more cities including Hangzhou, the city which is due to host the Asian Games in September, according to the country’s central bank. Until now, the country’s Digital Yuan trials have been going on in 11 cities, and the People’s Bank of China (PBoC) — the country’s central bank is planning to roll out the digitisation trials in more regions. The People’s Bank of China said the ongoing process of digitisation trials will now focus on privacy protection and crime prevention.
According to a fresh press release issued by the PBoC, Digital Yuan trials were carried out in Shenzhen, Suzhou, Xiong’an, Chengdu, Shanghai, Hainan, Changsha, Xi’an, Qingdao, Dalian, and the closed-loop of the 2022 Winter Olympic Games. Now, the bank is planning to expand the trials to Tianjin, Chongqing, Guangzhou, Fuzhou, Xiamen, Hangzhou, Ningbo, Wenzhou, Huzhou, Shaoxing and Jinhua.
The PBoC intends to develop the Digital Yuan, also referred to often by the central bank as Digital Renminbi, as a response to digital transformation and the rapid growth of private digital platforms. The PBOC aims to increase market competition by providing its own digital currency, which will improve the efficiency and safety of the payments system, facilitate faster payments and reduce transaction costs.
At a press event in January, Zou Lan, head of financial markets at the People’s Bank of China (PBoC) the central bank’s Digital Yuan wallet was one of the fastest-growing apps in China by number of installs. Zou Lan also mentioned that about one-fifth of the population, by then, had already set up e-CNY wallets and that the country had already seen CNY 87.5 billion (roughly Rs. 1,07,765 crore) worth of transactions have been made using the digital fiat currency.
In an annual report on the Digital Renminbi, the PBoC said that there would be more testing of cross-border use based on domestic practices and international demand in line with the principles of compliance, interoperability and no disruption.
It also appears to be a logical move for the PBoC, as a central bank digital currency frontrunner, to be willing to participate and take the lead in setting standards and a regulatory framework in the space. But the central bank is aware that such attempts can only be accomplished through collaboration with other central banks, monetary authorities and international financial institutions.
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