Chinese Exec Says Digital Yuan is Designed for Retail Transactions

China’s digital yuan has been designed for retail transactions rather than to replace the US dollar system, revealed Zhou Xiaochuan, President of the China Society for Finance and Banking.

China’s central bank will be rolling out the e-CNY or the digital yuan for global users, during the winter Olympics later this year. Visitors to the 2022 Beijing Games will be able to download a digital yuan wallet app or store the digital money on a physical card. They can also get hold of wristbands, which can be swiped to make transactions.

Earlier this month, The People’s Bank of China (PBOC), announced that it will be amplifying its trial for digital yuan (CBDC) to more areas, including cities in the eastern Zhejiang province which will be hosting the Asian Games this year.

CBDC For Retail Transactions

According to reports, in a recent Global Finance Forum, Zhou said that the e-CNY will primarily focus on retail transactions for the convenience of people and merchants, rather than to replace the US dollar. He explained,

“The People’s Bank of China stressed that it conducted research and development of the e-CNY as a substitute for cash in circulation, showing that the PBOC expects the use of the e-CNY to be primarily focused on retail payments, especially bringing more convenience to people with the help of internet and mobile internet terminals.”

Zhou reiterated that in the near future, the digital yuan will be used for cross-border retail transactions and cannot be used as a weapon. He emphasized that if SWIFT, the world’s leading provider of secure financial messaging services, is heavily used as an instrument to impose sanctions, others can definitely find other financial messaging channels to complete trade. He went on to add,

“If another financial messaging channel is created to bypass SWIFT, there will be a transitional period and tons of work to do. During the transitional period, the efficiency of trade will be affected.”

The Explosion Of CBDCs Around The World

Central banks all over the world are exploring the possibility of retail digital currencies, which can either be used by citizens or businesses. In October 2020, Bahamas, launched the digital version of the Bahamamian dollar- “Sand Dollar”. The Central Bank Of The Bahamas primary goal was to improve financial inclusion, reduce service delivery costs and increase transactional efficiency.

Last year in October, Nigeria became the first African nation to launch a digital currency – the eNaira. Cambodia with its Bakong and eastern Caribbean nations with their DCash are also among the frontrunners in the CBDC race.