According to a statement by Guo Weimin, Bank of China’s chief scientist, the economic turmoil caused by the pandemic is one of the reasons why Chinese corporations should urgently shift to the use of digital currencies, stating:
“There will be a lot of challenges from the pandemic that will make good cases for the use of digital currencies.”
Guo: Better for the Enforcement of Financial Regulations
Guo had also said that the importance of implementing the digital currency program lies in its ability to make it easier for the government to monitor cash flow and enforce financial regulations.
“Regulatory capacity and traceability should be the key focus given the current economic situation, as this has become rather urgent,” Guo noted.
Experts believe that if the shift is successful, it will move more developments on the currency towards finding better use cases for it, benefiting businesses and government services in the long run.
According to Zhou Ziheng, chairperson of the Zhejian Modern Digital Finance Research Institute, the corporate side of shifting to the digital yuan would involve the transition of corporate assets and finances to digital finance. This is what sets it apart from the mere deployment of digital payment services.
China’s Digital Currency Initiatives
It has been reported recently that China is already doubling its efforts to expand the trial for their “digital yuan.” The lead for this effort is the People’s Bank of China, which has been reportedly pushing through the Digital Currency Electronic Payment (DCEP) program to make it in time before the Winter Olympics in Beijing.
On January 4, BTC Manager had reported about the most recent test conducted for the digital currency. It covered the distribution of 100,000 digital ‘red packets’ that held 200 yuan each. These packets were distributed to Shenzhen citizens through a lottery.
There is no official timeline yet, however, for the actual rollout of the digital RMB. But pilot trials have begun in Shenzhen, Chengdu, Suzhou, and Xiongan. Residents of the trial cities are asked to download the digital yuan app to be able to access the currency. They were also informed that they only have until January 17 to use it in their transactions with a select set of stores. And with over 140,000 transactions during the testing operation, the test was considered a massive success, as reported yesterday.