Digital Yuan Won’t Replace Global Currencies, Former Central Bank Chief Says

“[…] We don’t have the ambition to replace existing currencies with digital yuan,” said Zhou Xiaochuan, former China’s central bank governor.

December 14, 2020 | AtoZ Markets – China’s national digital currency, formally known as the Digital Currency Electronic Payment (DCEP) will support Beijing’s efforts to promote the yuan as an international currency.

Nevertheless, DCEP is not intended to replace the globally recognized fiat currency of the dollar and euro. This was stated by the former head of the central bank Zhou Xiaochuan, according to the South China Morning Post.

‘We are not like Libra’: China’s digital yuan won’t replace existing currencies”

According to Xiaochuan, one of the main advantages of using a digital system is that it allows both payments and currency conversion in real time. This could be a boon for cross-border trade, said Zhou Xiaochuan, who left his post as governor of the People’s Bank of China in 2018.

“But we are not like Libra, and we have no ambition to replace existing currencies,” he stressed.

Many financial regulators around the world are wary of the Facebook payment system project based on the Libra stablecoin, recently rebranded to Diem. Concerns concern possible threats to financial stability and monetary sovereignty.

Read also: Facebook Libra Stablecoin Will Launch in January 2021

Zhou Xiaochuan noted that China has learned a lesson from the Libra/Diem reaction and is therefore taking a cautious approach. Rather than challenging regulations and monetary systems, Beijing wants to gradually convince consumers and overseas merchants to accept yuan payments.

“Some countries are worried about the internationalization of the yuan. We cannot push them towards sensitive issues and impose our will. The perception of great-power chauvinism should be avoided,” Zhou Xiaochuan said.

We will remind, the head of the blockchain startup Sino Global Capital Matthew Graham expressed the opinion that the digital yuan threatens the global hegemony of the dollar.

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