BEIJING: China is set to roll out a new “action plan” on January 1 aimed at improving the management, operations, and overall ecosystem of its digital currency, according to a senior official of the People’s Bank of China (PBoC).
Lu Lei, Deputy Governor of the PBoC, stated in Financial News—a publication affiliated with the central bank—that the digital yuan is designed to become a modern form of digital payment and circulation within China’s financial system.
China Digital Yuan Operations from January 1
As part of the next phase, China will introduce a “new generation” framework for the digital yuan. This will include an updated measurement framework, enhanced management systems, improved operating mechanisms, and a more comprehensive ecosystem to support its use.
One of the key features of the action plan is allowing banks to pay interest on digital yuan balances held by users. This move is expected to encourage wider adoption of the currency among consumers and businesses.
The plan also proposes the establishment of an international yuan operations centre in Shanghai, China’s major financial hub, further signalling Beijing’s ambitions to expand the currency’s global role.
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Globally, central banks have been accelerating efforts to digitalise currencies, driven by the rapid growth of online payments during the COVID-19 pandemic and the rising popularity of cryptocurrencies such as bitcoin. China has been working on its currency since 2014 and has already conducted multiple pilot programmes for the e-CNY.
While mobile and online payments are already widely used in China, the yuan could give the central bank greater oversight and control over payment data, reducing reliance on major technology companies.
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