An official from China’s foreign exchange regulator expressed support for the digital yuan initiative of the CBDC.
Some of the key characteristics of CBDC, according to Lu Lei, deputy administrator of the State Administration of Foreign Exchange (SAFE), might assist in improving the efficacy of monetary policy tools, she told the CNA agency.
The source also said that because of its programmable qualities, central banks might create CBDC’s M2 currency, which contains some deposits and savings. Lu concluded that CDBC-based payments may become safer, more practical, and more inclusive.
Development of the Digital Yuan
China’s official digital currency, the digital yuan, has undergone substantial development in recent years, and this has been a major emphasis for the nation.
China has been aggressively working on its CBDC project, also known as the Digital Currency Electronic Payment (DCEP) initiative, under the People’s Bank of China (PBoC) direction.
One of the main objectives of the digital yuan is to take the place of actual banknotes and coins, lessen the need for cash, and promote the usage of electronic payments.
The purpose of this effort is to supplement the current private-sector electronic payment systems that Alipay and WeChat Pay dominate. China has been running numerous experiments and pilot projects to evaluate the use and acceptance of the digital yuan.
For instance, the PBoC conducted a lottery in January 2021 to deliver 100,000 digital “red packets” to residents of Shenzhen. These packets, which each included 200 yuan, gave users the chance to experiment with and utilize the virtual money. The government has been carrying out programs in several areas to encourage the use of the digital yuan further.
