Zhou Xiaochuan, former governor of China’s central bank, reiterates that the use of the digital yuan for the moment will be focused on the domestic sphere. While international users participating in Chinese retail will be able to operate, this digital currency is not intended for foreign trade.
The former manager pointed out that the digital Yuan (CNY) had been designed during his tenure to be used in the retail market, especially thinking of providing advantages to consumers and sellers, although denies that this was intended to “replace the US dollar”.
The digital yuan experiment according to China
Despite the fact that China has tried to position the fiat yuan at the same level as the dollar, its American competition is today the equivalent of what would be a “lingua franca” in regards to most international commercial exchanges. One of the things that seems to worry the Asian giant the most is that Western countries could leave the country out of the globalized economy. This is one of the reasons why China is so determined to lead alternative payment methods that reduce its dependence on the dollar.
And although he claimed that the digital token had “cross-border payment prospects in the future“, argued that this would apply to the “cross-border retail“, and not to trading. Zhou was quoted by the Caijing media outlet as making the remarks at the Tsinghua PBCSF Global Financial Forum 2022.
Zhou Xiaochuan’s remarks on the SWIFT banking system
Zhou also stated that the Chinese alternative to SWIFT, CIPS (Cross-Border Interbank Payments System), had been designed with cross-border yuan payments in mind. And while he sang the praises of SWIFT as a messaging system, he hinted that CIPS’s goal may well have been to reduce China’s reliance on a banking platform whose on-off switch appears to be under Washington’s control.
While praising the efficiency and scalability of SWIFT, he noted: “SWIFT is not irreplaceable, but trade may be affected during the transition period“.
In the meantime, Chinese drivers in some parts of the e-CNY pilot zone will be able to pay their expressway tolls using their wallets and digital yuan. Without a doubt, China’s initiative to promote its digital currency shows the way in which a digital asset can be used in a massive use case, as it could be the case of Bitcoin in the future.
FJSen has reported that the operator of a section of the Fujian expressway has closed a deal with a branch of China Construction Bank that will allow expressway drivers to pay their tolls using the digital token. the deal it will also allow drivers to pay for gasoline and other products in a busy highway service area.
Today it is not feasible to pay with cryptocurrencies such as Ethereum or other alts in shops, but the digital yuan experiment is showing how one day this payment alternative could be viable in everyday life.
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