China’s Central Bank has announced that its digital yuan renminbi is ready for deployment.
English-language local news outlet China Banking News reported on Sept. 21 that the People’s Bank of China (PBoC) announced the completion of the development of its central bank digital currency (CBDC) on Sept. 19.
Formally called the Digital Currency Electronic Payment (DCEP) system, China’s goals for the digital currency go far beyond its borders.
Reuters reported today that the PBoC is eager to become the world’s first nation to issue a CBDC in an attempt to internationalize its fiat currency and reduce its reliance on the dollar’s financial infrastructure.
The new financial battlefield
The central bank also said that the issuance and control of a digital currency is a “new battlefield” of competition between sovereign nations as it would bring great changes to existing international finance. Reuters cited an article in the PBoC’s China Finance that said “China has many advantages and opportunities in issuing fiat digital currencies, so it should accelerate the pace to seize the first track.”
The announcement builds on previous reports of large-scale testing of the CBDC. As Modern Consensus reported in mid-August, the digital currency is already being tested in Beijing, Hong Kong, Macau, Shenzhen, Suzhou, Chengdu and Xiong’an.
The article, “New Development Opportunities for China’s Statutory Digital Currency,” published by the central bank claimed that the institution completed the technical preparations for its digital currency and “satisfied conditions for deployment.”
The announcement also featured a rundown of the CBDCs development history, noting that local authorities started researching the topic in 2014 and this resulted in the founding of the Digital Currency Research Institute in 2017. PBoC reportedly submitted 22 patent applications concerning digital currency issuance, 65 concerning its circulation and 43 its applications.
As Modern Consensus recently reported, The Bahamas could potentially beat China in its race to launch a CBDC. The nation announced that it intends to launch its digital currency in October.
Recent reports also indicate that the PBoC deputy governor Fan Yifei explained that DCEP acceptance will be mandatory for all Chinese citizens. The reason is that the digital currency will be treated just the same as the physical banknotes of the local fiat currency.
(Updated 2:05 p.m. on Sept. 21 to correct author)