Ex-Central Bank Chief Says China ‘Must Lead World’ in CBDC Adoption
Former People’s Bank of China (PBoC) governor Zhou Xiaochuan has called on China to lead the global charge in the adoption of central bank digital currencies (CBDCs).
In a speech delivered at the 2019 Bund Summit, Zhou commented that the digital transformation of finance will bring about a “new world” and that it is China’s responsibility to lead the world. He noted the need for the country to demonstrate its technological capabilities in the face of the global market, and said China should take steps to prepare for the launch of its own digital version of the yuan.
Zhou explained that developing digital currencies that retain the advantages of a fiat currency – such as being inherently convertible, in wide circulation and with central bank supervision—is the direction taking hold among global central banks. He also highlighted the need to figure out how to issue, use and manage the digital currency without disrupting existing financial systems while avoiding legal risk.
Furthermore, Zhou emphasized the importance of using new technologies to find solutions for new challenges, such as digital identity, anti-money laundering and the use of blockchain in central bank operations. He also warned that the market should strike a balance between challenging existing products and services and introducing disruptive innovation.
The PBoC is reportedly developing its own digital currency, which would be the first of its kind, although no timeframe has been specified. If successful, the PBoC would be the first central bank to issue CBDCs, setting an example for the rest of the world.