Ex PBoC head says China has no plans to displace USD with digital yuan. President of the Chinese Finance Association and former governor of the PBoC, Zhou Xiaochuan alleges that China’s digital yuan is not intended to replace global fiat currencies such as the US dollar and the euro, the South China Morning Post reported on Dec. 14.
Also known as digital currency electronic payment or DCEP, China’s digital yuan is designed solely to transform cross-border trade and investment, Zhou said. Zhou contrasted China’s digital currency with the Facebook-backed cryptocurrency project, formerly known as Libra.“If you are willing to use it, the yuan can be used for trade and investment […] But we are not like Libra and we don’t have an ambition to replace existing currencies.”
Zhou continues to say that China learned a lesson from global regulatory pushback to the Libra project, with regulators fearing that it would disrupt financial systems and monetary sovereignty. Zhou said that China took a more cautious approach “Some countries are worried about the internationalization of yuan […] We can’t push them on sensitive issues and we can’t impose our will. We must avoid the perception of great-power chauvinism.”
The former PBoC governor additionally noted that one of the major benefits of DCEP is that it allows both payments and currency conversions in real time. “If the currency exchange is realized at the moment of a retail transaction, and there is oversight of that exchange […] it brings new possibilities for interconnection,” he said.
Zhou also stressed that most retail cross-border payments involving Chinese consumers are already cashless and settled via credit cards or payment services like Alipay and WeChat Pay, but a digital yuan has additional benefits like real-time processing and transparency.
[image: Toby Yang]