Security News > 2021 > May > China's Digital Yuan not aimed at challenging US dollar, says former People’s Bank governor

A former governor of the People's Bank of China has given a speech in which he suggested that China's Digital Yuan is not intended to increase China's influence over global financial systems.

An unauthorised translation of the speech by Chinese journalist Zichen Wang reports that Zhou said China's digital currency "Is mainly targeted on the modernization of the domestic payment system, keeping pace with the digital economy and the Internet era, improving efficiency, and reducing costs, especially for the retail payment system".

Replacing the US dollar's role in international trade is not China's plan, Zhou said, and added that the Digital Yuan also won't immediately make China's currency more widely accepted abroad. "The internationalization of the RMB depends more on institutional and policy choices, and more on the progress of China's reform and opening up, rather than on technical factor," Zhou said.

The former governor said that the Digital Yuan is instead a big upgrade to China's domestic payment systems, as it will give them a common backbone.

Zhou said he doesn't see the Digital Yuan as replacing electronic payment schemes such as those run by China's web giants but will instead lubricate their operations by enabling often invisible improvements to settlements among schemes and banks.

Zhou did say that if the Digital Yuan succeeds it will improve the status of China's currency and that won't hurt its role in cross-border payments.

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