China’s digital currency, the digital yuan or e-CNY, might soon be accessible for foreign audiences. The country plans to test out the currency in the upcoming Beijing Winter Olympics 2022.
At the Boao Forum for Asia moderated by CNBC, Deputy Governor Li Bo of the People’s Bank of China (PBOC) said, “For the upcoming Beijing Winter Olympics, we were trying to make e-CNY available not only to domestic users but also to international athletes and like visitors”.
Digital Yuan: a threat to the US dollar?
The emergence of China’s digital yuan has fueled speculation about the currency’s potential to overpower the US dollar, which has long served as the world’s reserve currency. Furthermore, the testing of digital yuan on the international audience, in a way, could come off as part of China’s scheme to internationalize the renminbi.
In response to the concern, Li elaborated, “For the internationalization of renminbi, we have said many times that it’s a natural process and our goal is not to replace (the) U.S. dollar or any other international currency”. “I think our goal is to allow the market to choose and to facilitate international trade and investment,” Li continued.
Despite the long explanation, PBOC is reportedly working with other central banks to explore the use of e-CNY in cross-border trade. Noted from CNBC, several countries included in the list are Thailand, the United Arab Emirates and Hong Kong.
Li, however, reiterated by saying, “Our focus again is that we want to establish a very solid domestic e-CNY first, and build up a healthy ecosystem. At the same time, working with our international partners. Hopefully, in the long term, we have a cross border solution as well”.
China’s upcoming plans
In the future, the e-CNY application will mostly occur in China. The country aims to boost cashless payments with the use of digital currency. This way, China hopes to minimize and eventually replace cash and coins circulating in the country. China’s digital yuan is not a cryptocurrency. Furthermore, the digital yuan bears a different design from bitcoin.
Li also said that the Chinese central bank will expand the testing of the digital yuan with more. The bank will explore more scenarios and more cities with e-CNY. The deputy governor further supports this statement.
After long research since 2014, e-CNY has finally launched a number of pilot projects in limited areas. Several cities that have access to e-CNY include Shenzen and Beijing. In regards to the digital yuan, PBOC needs to improve the scope of its pilot projects. This also means strengthening the technology infrastructure that underpins the digital yuan.