China Proposes Global Rules For CBDCs, Expands Digital Yuan Trials

  • A representative of the PBoC has proposed synchronizing CBDC fund flows around the world, as to assist regulators in monitoring the transactions for compliance.
  • Chinese citizens can now apply for a digital yuan wallet with one of the six state owned banks in Shanghai and Beijing.
Chinese President Xi Jinping at a press conference

Chinese President Xi Jinping at a press conference after a meeting with the German Chancellor in the Chanclery in Berlin, 5 July 2017. Shutterstock

China has proposed a number of global rules for Central Bank Digital Currencies (CBDCs) during a seminar at the Bank of International Settlements (BIS), Reuters reported on 25 March.

According to the publication, the set of rules were proposed by the director of China’s Digital Currency Research Instituted, Mu Changchun, who said that CBDC fund flows should be synchronized to assist regulators in monitoring the transactions for compliance. He further advised the gathering of monetary authorities that its important to enable interoperability between CBDC systems from different jurisdictions. Changchun said in a statement:

“Information flow and fund flows should be synchronised so as to facilitate regulators to monitor the transactions for compliance. We also propose a scalable and overseen foreign exchange platform supported by DLT (distributed ledger technology like blockchain) or other technologies.”

During the seminar, the official from the People’s Bank of China (PBoC) also said his country was developing its digital yuan as a “back-up” payment option for Alipay and WeChat Pay, which he claimed were responsible for 98% of the mobile payments in China, Bloomberg reported on 26 March. He further said China needed the CBDC in case “something bad” happened to Alipay and WeChat Pay, which would definitely have a “negative impact” to the financial stability of China.

The country is also expanding its digital yuan tests, with the six major state-owned banks now allowing members of the public to apply for a digital yuan wallets in Shanghai and Beijing, Beijing Business Times reported on 24 March. The applications, however, will not be automatically approved, with the PBoC stating that it will review each application on a case-by-case basis. An employee at the Postal Bank of China told the publication:

“Although the application criteria has not loosened up, we’ve opened it up to the public so the process is less restrictive than before. As the review process goes digital, the speed of getting applications approved will be much faster later on.”

Citizens interested to participate in the CBDC trial will need to fill in their real names, ID and mobile phone numbers, email and employee names. If approved, users will be able to download the digital yuan wallet, which will have a payment limit of 1,000 yuan daily.

Discussion
Related Coverage
WeChat Bans Crypto and NFT Public Accounts
  • WeChat, China’s largest social media platform with over 1.1 billion daily users, has changed its policy and will now ban accounts connected to crypto and NFTs.
  • The platform has placed “engaging in virtual currency or digital collection business” under its illegal operations clause, meaning it will be considered as “violating content”.
June 21, 2022, 10:19 AM
wechat

Shutterstock

Biden Issues Executive Order on Crypto
  • Joe Biden’s 82nd executive order requires government agencies to coordinate the creation of a national framework for crypto, and explore the potential of U.S. CBDC.
  • The Crypto Council for Innovation noted the order would likely lead to a much needed regulatory clarity around digital assets in the U.S..
EU to Propose Digital Euro Bill in 2023
  • The bill will serve as the legal foundation for the European Central Bank’s ongoing technical work on a euro-based CBDC.
  • The European Commission is also planning to call the public for comments next month on how the digital euro could be used.