- According to Yi Yang, China’s DCEP still requires a more comprehensive legal framework.
- He added that FinTech companies have an edge over commercial banks.
- Prior to this, PBoC published a notice, seeking to revise China’s current banking law.
The governor of the People’s Bank of China (PBoC), Yi Yang, has disclosed that the launch of a digital currency in four Chinese cities has been smooth. He revealed this news while speaking on a virtual panel with Agustin Carstens, the head of the Bank for International Settlements, and Klaas Knot, the president of the Dutch Central Bank during the Hong Kong FinTech Week conference earlier today. In the conference, Yang also unveiled that the bank had processed more than 4 million digital yuan transactions so far, totaling 2 billion yuan (£231.5 million).
According to Yang, China’s Central Bank Digital Currency, also known as DCEP is still in its initial stages of development despite achieving this feat. He added that the coin requires a more comprehensive legal framework. The bank’s governor went on to state that the PBoC will initiate further discussion with overseas central banks and regulators that focus on the legal frameworks for CBDCs.
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Yang added that FinTech companies have numerous advantages over commercial banks regarding developing a customer base and managing risk. This is because new technologies such as microloans and mobile payments have helped boost access to financial services in remote areas.
On top of this, the rise of contactless banking, especially during the COVID-19 pandemic has introduced challenges for central banks because they have to juggle between managing their customers’ convenience while ensuring their safety. Apart from this, Yang believes that central banks face an uphill task when it comes to protecting their customers’ private information.
China’s continued effort to legalize its digital yuan
This news comes after PBoC recently published a notice seeking public feedback to revise the current central banking law in order to legalize the digital yuan and ban the circulation of yuan-pegged digital currencies. In the publication, the bank proposed to amend article 19, section 3 of the law to feature the wording that renminbi includes both a physical form and digital form. Additionally, the bank proposed an amendment to Article 22 Section 3, noting that any individual or entity shall not make or issue any tokenized note or digital tokens that replace the renminbi’s circulation in the market.
The bank went on to state that,
“For anyone that violates such regulation, the PBoC will halt such activities and forfeit any proceed from the making and selling of yuan-backed digital tokens and issue a fine that is up to five times of the involved proceeds.”