China proposed a set of global rules for central bank digital currencies (CBDC) on Thursday, from how they can be used around the world to highly sensitive issues such as monitoring and information sharing. Reuters reported global central banks are looking at developing digital currencies to modernize their financial systems, ward off the threat from cryptocurrencies like bitcoin, and speed up domestic and international payments. People’s Bank of China is one of the most advanced in its effort.
PBoC director-general proposes global rules for CBDCs.
Mu Changchun, the director-general of the Chinese central bank PBoC digital currency institute, laid out the new proposals at a Bank for International Settlements seminar. “Interoperability should be enabled between CBDC (central bank digital currency) systems of different jurisdictions and exchange,” he said. The PBOC had shared the proposals with other central banks and monetary authorities, the director-general said. “Information flow and fund flows should be synchronized so as to facilitate regulators to monitor the transactions for compliance,” he added.
China aims to become the first major nation to issue a CBDC.
The PBoC is aiming to become the first major central bank to issue a CBDC, part of its push to internationalize the yuan and reduce dependence on the dollar-dominated payment system. However, the European Central Bank is also exploring the introduction of a digital euro soon. It’s running into opposition from Germany, though, where the Bundesbank worries that a digital euro could pose risks to banks. China’s central bank also noted that it would quicken pilot programs to develop its digital yuan, as it seeks to boost consumption to shore up economic growth. Several other countries are also actively exploring digital currencies to compete with the growing interest of the public in decentralized digital currencies around the world.