The ongoing intensive trials of China's digital form of fiat money have shown the e-CNY can be used on a large scale in some scenarios without any stability concerns, a senior central bank official said on Sept 10.
His observation coincided with the establishment of a trial zone for the e-CNY in Beijing on Sept 10. The zone will further the large-scale testing program of the digital currency, under the guidance of the PBOC Digital Currency Research Institute.
The e-CNY's application scenarios based on Huawei's operating system HarmonyOS were introduced to users for the first time. Users can directly add an e-CNY app on the desktop of Huawei mobile phones for payment. The app can also be installed on smart watches or other smart devices based on the HarmonyOS system.
The People's Bank of China, the central bank, will steadily promote the launch of the e-CNY, and take prudent attitude toward its research and development. The digital currency system should be safe, inclusive and friendly to users, based on evolving technologies, said PBOC Deputy Governor Fan Yifei.
"But, some problems need to be solved first," Fan said at the China (Beijing) Digital Finance Forum 2021. The central bank will focus on optimizing basic operations and fundamental technical aspects of the e-CNY, as well as build a comprehensive ecosystem of the national digital currency.
The regulatory rules for the e-CNY should neither fully follow the account-based management methods nor replicate the rules for physical currency. "Based on the existing financial infrastructure, we support the connection between the e-CNY and traditional electronic payment systems, as well as promote the connection between digital wallets and bank accounts," the PBOC official said.
The e-CNY ecosystem should be under the "two-tier" operational framework. "We will explore the sustainable development model which can encourage joint participation and competition of industrial subjects, and satisfy the needs of a wider range of users in different scenarios," Fan said.
Duan Mengran, vice-president of the AI and smart scenarios of consumer business department of Huawei, said the future cooperation between the HarmonyOS system and e-CNY ecosystem may together explore more application scenarios like smart devices, including refrigerator, treadmill, charging pile, POS (point of sale) machine and ATMs (automated teller machines). "A new era may come soon when everything is connecting with each other and everything can be used for e-CNY payment," said Duan.
China is expanding the e-CNY trials to 10 cities and areas, preparing for application scenarios in the 2022 Winter Olympics in Beijing. Monetary authorities in many other countries also published plans for designing their own central bank digital currencies, or CBDCs, and some have finished the initial testing.
"China has made gratifying progress in this regard, and further efforts are needed," Zhou Xiaochuan, former governor of the PBOC, said on Sept 10.
Zhou urged more international cooperation, particularly to enhance communication and exchanges with regulatory institutions in other countries. International coordination in antitrust, data governance and consumer protection should be strengthened, said Zhou, who is also the vice-chairman of the Boao Forum for Asia.
"We should actively participate in the formulation of international rules in the digital field," Zhou said. "China can actively participate in the discussion and research of international rules in international cooperation, so as to strive for a good international environment for the development of the digital RMB."
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