What’s the story
China is set to unveil an “action plan” for its digital currency on January 1.
The announcement was made by People’s Bank of China (PBoC) Deputy Governor Lu Lei in Financial News, a state-run media outlet.
The plan aims to boost the management and operations of the country’s digital yuan, making it a modern means of payment within the financial system.
New framework for digital yuan to be launched
The action plan will introduce a “new generation” framework for the digital yuan. This will include a measurement framework, management system, operating mechanism, and ecosystem.
The PBoC hopes this comprehensive approach will streamline the use of the digital currency and encourage wider acceptance among consumers and businesses alike.
Banks to offer interest on digital yuan balances
As part of the action plan, banks will offer interest on balances held by clients in digital yuan. This move is aimed at incentivizing the broader adoption of this new currency.
The PBoC hopes that by making it financially beneficial for consumers and businesses to hold digital yuan, they can encourage more people to start using it in their everyday transactions.
International digital yuan operations center proposed
The action plan also proposes the establishment of an international digital yuan operations center in Shanghai, China’s eastern financial hub.
This is part of a broader strategy to expand the reach and influence of the digital yuan on a global scale.
It comes as central banks around the world are exploring ways to digitize their currencies amid the rise of online payments and cryptocurrencies like Bitcoin.
PBoC’s long-standing commitment to digital currency
The PBoC has been developing a digital currency since 2014 and has been testing the use of “digital yuan” or “e-CNY” in various pilot programs.
The move comes as consumers across China are already widely using mobile and online payments.
However, the introduction of a digital yuan could give the central bank more data access and control over payments, instead of big tech giants.