The chair of Chinese payments giant UnionPay has highlighted the ability of a statutory digital currency as proposed by China’s central bank to improve the ability to supervise monetary operations.
Speaking at the 3rd China Finance 40 Yichun Forum (第三届中国金融四十人伊春论坛) on 10 August Shao Fujun (邵伏军), chair of China UnionPay, said that the most likely future for digital currency in China would be a statutory digital currency issued by the central bank and backed by the credit of the state.
At the same event Chinese central bank payments official Mu Changchun said that a digital currency/ electronic payments (DC/EP) system was on the “verge of release.”
Shao highlighted several positive effects of the launch of a central bank digital currency in China:
- Raising the efficiency of the supervision of monetary operations and enriching monetary policy methods. The release of central bank digital currency will make real-time collection of data on money creation, accounts and circulation a possibility, abetting in-depth analysis via technologies such as big data. Central bank digital currency will also help to prevent money-laundering and terrorist financing.
- Driving increases in the “smart” level of transaction procedures. A statutory digital currency can be integrated with smart technologies and smart contracts, helping to resolve the problem of trust issues between transaction parties, as well as the issue of simultaneous information and fund flows, greatly simplifying transaction procedures between traditional financial institutions.
- Pragmatically raising the efficiency of payments and cross-border payments in particular, leading to the creation of an “open payments environment.” The use of a statutory digital currency can greatly “flatten” the statutory currency circulation network, achieving comprehensive connections between base-level payments systems, greatly reducing exchange links, raising the liquidity of cross-border capital, and resolving problems associated with traditional cross-border remittances including long-chains, slow delivery times and low efficiency.