The former head of the Chinese central bank has taken further pains to reassure observers that China has no plans to use the Digital Renminbi to either replace the greenback as the global reserve currency, or to make domestic third party payments systems obsolete.
“The original goal of its design and the direction for which we are striving is not at all to replace the US dollar’s status as reserve currency or the international payments currency,” said Zhou Xiaochuan (周小川), former head of the People’s Bank of China (PBOC),
“The development of the DCEP is mainly focused on modernisation of the domestic payments system, and keeping pace with the digital economy and the Internet era. It will raise efficiency and reduce costs, especially for retail payments services.”
Zhou made the remarks on 22 May at the 2021 Tsinghua/People’s Bank of China School of Finance Global Finance Forum (清华五道口全球金融论坛) held in Beijing.
The former central bank chief said that ongoing trials of the Digital Renminbi which were first launched in April last year will not serve as the key driver behind internationalisation of the Chinese currency.
“The modernisation and digitisation of the renminbi payments system will be of definite help to raising cross-border usage of the renminbi, but won’t be of huge assistance,” said Zhou.
“Internationalisation of the renminbi will be determined more by choices in systems and policies, and determined by the progress of China’s reform and opening, as opposed to technical factors.”
Zhou also sought to dispel reports that the Digital Renminbi will replace third-party payments systems in China, such as those developed by Ant Group and Tencent.
“This also is absurd talk,” said Zhou, pointing out that Chinese commercial banks and several of the leading third party payments organisations in China all participated in the research and development of the Digital Renminbi.
“Everybody is in the same boat, and at times the people in the boat will have different opinions, and sometimes they may even engage in dispute over certain issues. But it’s still the same boat, and there is no case where someone is replacing anyone else.”