In the continuing splurge of written pieces, we now hear from the PBOC, the central bank of a major economy that is seemingly furthest along in the non-trial issuance of a CBDC. This piece in Reuters advises that the PBOC is now on trial throughout Shenzhen, Shanghai, and Beijing with the e-CNY.
We have been chasing after these stories in this channel and expect many more revelations in the next year. China has been very aggressive in its pursuit of a CBDC, just as they have been skeptics of decentralized cryptos such as bitcoin.
‘The People’s Bank of China (PBOC) will strengthen data security and personal information protection as it forges ahead with domestic testing of the digital yuan, it said in a white paper that is the first comprehensive disclosure of its plans….China is a front-runner in the global race to launch central bank digital currencies (CBDC) and is testing a digital yuan, or e-CNY, in major cities…..but has not set a timetable for its official rollout…..Many analysts believe the e-CNY will bolster the currency’s global status as China seeks ultimately to break the dominance of the dollar settlement system……eport “The internationalisation of a currency is a natural result of market selection,” the PBOC said in the white paper, downplaying its global ambition.’
Of course, as most have also been discussing, the use of CBDCs as a cross-border payments tool is on the table, and the e-CNY is no exception. So far the trials conducted have been for retail purposes but there is obviously no reason that wholesale payments won’t also be tested in the near future.
‘ “Though technically ready for cross-border use, e-CNY is still designed mainly for domestic retail payments at present.”…The PBOC said it will explore cross-border payment programs in coordination with other central banks, “preconditioned on mutual respect to monetary sovereignty and compliance”….The PBOC “is willing to participate actively in international exchanges of views on digital fiat currency and discuss standards setting … in order to jointly advance the development of the international monetary system,” it added.’
The idea of secure data and non-surveillance will be the most sticky one when it comes to dealing with a Chinese CBDC. Any that are not questioning this, we have a bridge available and for you to buy in Brooklyn. This is obviously a generally applied question and will be the most gating factor for these applications going forward.
‘In an apparent attempt to ease concerns over government surveillance, the PBOC on Friday vowed to protect personal information and privacy, while also guarding against misuse of e-CNY in Internet gambling, money laundering and tax evasion….The e-CNY system collects less transaction information than traditional payment, and does not provide information to third parties or other government agencies unless stipulated otherwise in laws and regulations, the PBOC said.’
Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group