A senior official from the Chinese central bank has provided further details on the statutory digital currency that is currently being trialed in multiple cities throughout China.
Fan Yifei (范一飞), deputy-governor of the People’s Bank of China (PBOC), said that the digital renminbi was “primarily positioned” as part of the M0 money supply, and that it was a public good provided to the public by the Chinese central bank that would not accrue interest or incur services fees for exchange or circulation by PBOC.
Fan made the remarks in an article published on 14 September by PBOC’s official news publication entitled “Analysis of the Policy Significance of the Position of the Digital Renminbi as M0” (关于数字人民币M0定位的政策含义分析).
Fan said that in order to ensure the security and stability of the digital renminbi system, PBOC would engage in the “prudential selection” of commercial banks to serve as operators on the basis of their capital standing and technical capabilities, and that such banks would take the lead in providing services for the exchange of digital renminbi.
Key considerations in this regard include making full use of pre-existing resources and technical capabilities; reducing risk, avoiding financial disintermediation and bringing benefit to the transmission of monetary policy.
Fan also stressed the “centralised management” role of PBOC with regard to the issuance of the digital renminbi including:
- Maintaining the status of statutory currency – centralised management of the digital renminbi will be of benefit to “resisting erosion by crypto assets and international stable coins,” and ensuring that the digital currency remains stable and secure.
- Raising systems efficiency and improving monetary policy transmission. Fan expects it to be of benefit to resolving the liquidity issues of small and medium-sized enterprises, raising the velocity of money and the execution efficiency of monetary policy.
- Maintaining financial stability. Fan foresees the use of technologies including big data and artificial intelligence to analyse transactions data and the flows of funds, to prevent and strike against money laundering, terrorist financing and tax evasion, in order to better reserve financial stability.