The Chinese central bank, the People’s Bank of China (PBoC), has taken an important step in the development of its digital currency. With the establishment of the Digital RMB Operation and Management Center in Beijing, China is preparing for the widespread adoption of the digital yuan, also known as the digital RMB.
According to Chinese media, the new center will be responsible for building, managing and maintaining the digital currency system. The establishment is part of China’s strategy to stimulate financial innovation and strengthen the position of the yuan on the global market.
New center strengthens digital infrastructure
The Digital RMB Operation and Management Center will contribute to the further digitalization of the Chinese financial sector. The center must ensure that the digital RMB becomes secure, efficient and widely applicable within the domestic payment system.
In addition, the center plays a role in Beijing’s development as a financial management center. The establishment follows shortly after that of the International Operations Center, which focuses on the use of the digital currency in cross-border transactions.
Cooperation between domestic and international units
While the international center works to link the digital yuan with foreign financial networks, the new operations center focuses on domestic technology and adoption.
Experts expect that both centers will work closely together. Together they form a so-called ‘two-winged structure’, which should accelerate the growth of the digital yuan both nationally and internationally.
Hong Kong accelerates development of digital dollar
Hong Kong is also working on its own digital currency: the digital Hong Kong dollar, or e-HKD. The Hong Kong Monetary Authority (HKMA) recently completed the second testing phase of this project and is preparing for practical implementation.
Initially, the e-HMO will be used for business and cross-border payments. Hong Kong aims to further strengthen its position as an international financial center.
China wants to give the yuan more influence worldwide
The establishment of the new units is part of China’s broader strategy to expand the international role of the yuan. The PBoC and the Bank of China want to expand the currency’s use in global trade and further open financial markets.
In addition, work is being done on the development of financial hubs in Shanghai and Hong Kong. China is also developing an independent cross-border payment system that should be more reliable and widely applicable.
Digital Yuan as a Counterbalance to US Dollar
With the digital yuan, China is trying to offer an alternative to the dominance of the US dollar. The dollar is still leading, especially in the market for digital stablecoins.
According to calculations by investment bank JPMorgan, global demand for digital currencies could reach $1.4 trillion by 2027. Currently, nearly 60 percent of the entire stablecoin market – with a combined value of over $308 billion – is pegged to the US dollar through Tether’s USDT.
With the establishment of the Digital RMB Operation and Management Center and the associated international cooperation, China is making it clear that it sees digital currency not only as a technological innovation, but also as a strategic means to increase its influence in the global economy.
Source: https://newsbit.nl/china-lanceert-nieuw-centrum-voor-digitale-yuan-stap-richting-wereldwijde-adoptie/
