On March 31, 2022, the People’s Bank of China held a symposium on the pilot work of digital RMB (digital yuan) research and development to summarize the preliminary research and development pilot work, and arrange the deployment of the next stage of work.
Present at the symposium were Yi Gang, Governor of the People’s Bank of China, and Fan Yifei, Vice Governor of the People’s Bank of China, as per a statement from PBoC.
Also attending the symposium were relevant departments, bureaus, and directly affiliated units of the People’s Bank of China, all-digital RMB participating R&D institutions, and relevant “responsible comrades” of the local governments and branches of the People’s Bank of China in the pilot regions.
“The meeting believed that since 2017, the People’s Bank of China, together with all participating research institutions, and with the strong support of the party committees and governments of the pilot areas, have made overall plans and careful organization to carry out the pilot projects steadily, dynamically improve the business technology design, continue to innovate application scenarios, and focus on solving financial service difficulties,” the statement reads.
Pain points verified the feasibility and reliability of digital yuan
According to the meeting parties, the pain points have preliminarily verified the feasibility and reliability of digital renminbi-related theories, policies, businesses, and technologies. At present, the digital renminbi has formed a number of application models in the fields of wholesale and retail, catering, cultural tourism, and government affairs payment.
Without providing any specific data or other evidence, the PBoC states that the major pilot projects such as the 2022 Beijing Winter Olympics have been successfully completed, “the number of users, merchants, and transactions participating in the pilot has grown steadily, and the market has responded well.”
The PBoC does not, however, seem to consider the digital renminbi to be ready for a full-scale roll-out in the entire country, instead, trials will continue in additional cities and areas. The PBoC pointed out that there remain issues that need to be sorted out through further research and exploration.
To this point, the statement says the research and development of digital renminbi will face new situations and new problems in terms of demonstrating convenience, optimizing inclusiveness, highlighting innovation, ensuring security, reflecting compliance, and strengthening sustainability.
Furthermore, the PBoC emphasized that the digital renminbi research and development pilot should adhere to the “people’s nature”, without expanding on the meaning of this expression.
The future is dependent on softer values
In the statement there are, however, hints that the future success of the digital renminbi, and for it “to play a greater role”, the issue is not a technical one but is rather dependent on “softer” values such as the coverage and inclusiveness of financial services, it helps local economic development, supports the construction of digital government affairs, improves the quality and efficiency of financial services for the real economy, and improve the business environment.
“In the process of the development, promotion, and popularization of the digital renminbi, the policy design should fully stimulate the enthusiasm and creativity of financial institutions, technology enterprises, local governments, and other parties, and encourage competition in the promotion and operation,” the statement reads, which may be interpreted as some participating entities aren’t as enthusiastic about the digital renminbi as the Chinese government and the PBoC would want them to be.
Other areas mentioned in the statement, that seem to need further research, include legislative questions and the impact of the digital renminbi on the financial system, the security of the digital renminbi system, and the relationship between privacy protection ...
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