(ATF) China should not rush to use the digital yuan for cross-border payments, the former head the country’s central bank, Zhou Xiaochuan, said at the Boao Forum on Wednesday.
Zhou cited regulatory obstacles and foreign concern about its global impact – indeed he downplayed suggestions that the digital currency being developed by the People’s Bank of China would pose a threat to the global financial system.
Observers in the United States had expressed concern that China’s bid to topple the dollar as the dominant global currency.
“In reality, it won’t be that serious,” Zhou said, explaining that the yuan still trails the dollar in terms of convertibility and free use.
China is a frontrunner in the global race to launch central bank digital currencies (CBDCs) – to modernise financial systems, ward off the threat from cryptocurrencies like bitcoin, and speed up domestic and international payments.
The digital yuan would mainly be used for domestic retailing payments, Zhou said, and while it was likely to also be used for cross-border payments, that involves complex issues such as restrictions on money laundering and terrorist and gambling funding.
Cross-border payments via digital yuan were not easy, he said. “We cannot rush it.”
The digital yuan would depend on the Chinese currency’s global status and that would be based on China’s economy, as well as stability of the RMB/yuan and the currency’s convertibility, he said.
Zhou was China’s key architect and driver of its global yuan ambitions up till 2018.
On Sunday, central bank vice governor Li Bo told the same forum that China would expand digital yuan experiments to more cities, but said there is no specific timetable for its official rollout.
Li also said internationalisation of the yuan would be a natural process, and that China’s goal was not to replace the US dollar or other global currencies.
With reporting by Reuters