Experts say that the new digital renminbi currently undergoing trials can help increase the international use of China’s national legal tender. As the renminbi (RMB, CNY) has become one of the most important currencies in the world, the People’s Bank of China is planning to conduct cross-border tests on the digital version of the renminbi e-CNY.
Digital Yuan Promotes “Renminbi Internationalization”
Chinese experts believe that the digital renminbi will further promote the “internationalization” of the renminbi. The China Internet Information Center portal cited current and former officials as saying on Wednesday that this will happen when the renminbi becomes the world’s third largest currency in terms of pricing, settlement and international reserves.
e-CNY, arguably the most advanced central bank digital currency (Central Business District), which is still mainly tested in the domestic retail payment test. However, Tu Yonghong, deputy director of the International Monetary Institute (IMI) of Renmin University of China, believes that cross-border e-commerce can provide the next use case scenario for the “natural and particularly acceptable” digital renminbi.
Wei Benhua, former deputy director of the State Administration of Foreign Exchange, said that the implementation of electronic renminbi in international payments in the future will not only promote the appreciation of the renminbi, but also affect the reform of the global monetary system. At the same time, he emphasized the need to reach a consensus on new rules and standards for sovereign digital currencies.
Chinese publications pointed out that the digital renminbi is “technically prepared” to facilitate cross-border transactions. The People’s Bank of China (PBOC) has recently confirmed its intention to explore the launch of a pilot program for electronic renminbi cross-border payments.
The report pointed out that improving cross-border payments is one of the goals set by the People’s Bank of China in the electronic renminbi white paper. The Central Bank of China will cooperate with global counterparts and monetary authorities to establish regulatory mechanisms and exchange arrangements for its digital currencies.
In early June, the Hong Kong financial authority Announce They will connect the region’s domestic payment network to China’s digital renminbi system to assess the currency’s usability in cross-border transactions. The test is part of the second round of trials after the initial small-scale trial of the digital renminbi wallet.
The RMB International Index, which reflects the level of RMB internationalization released by the International Monetary Institute, rose from 0.02 ten years ago to 5.02 points at the end of last year. According to IMI, the international use of the renminbi in the first half of 2020 has surpassed the yen and the pound sterling.
Do you think that electronic renminbi will increase the importance of renminbi as an international currency? Share your thoughts in the comments section below.
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