Zhou Xiaochuan on digital yuan: banks, third-party payment institutions and others are in the same boat

Zhou Xiaochuan on digital yuan: banks, third-party payment institutions and others are in the same boat

Will the digital renminbi, which is moving forward as a pilot, replace the status of the U.S. dollar? Is it closely tied to the internationalization of the RMB? What is the relationship with third-party payments? Zhou Xiaochuan, president of the China Society of Finance and honorary dean of Tsinghua University’s Wudaokou School of Finance, clarified and elaborated on the controversy related to the digital RMB at the 2021 Tsinghua Wudaokou Global Finance Forum held on May 22.

“The development of DC/EP (digital currency and electronic payment) is mainly based 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, and was originally designed and strived for with no intention of replacing the U.S. dollar as a reserve currency or as a payment currency internationally. ” Zhou Xiaochuan said.

In response to the argument that DC/EP and e-CNY (digital yuan) are trying to replace the current role of third-party payments, Zhou said, “I think this is also a delusion.”

He said the DC/EP plan is a two-tier system, and the entire R&D team is organized by the People’s Bank of China, with the participation of major commercial banks, telecom operators and several major third-party payment institutions, “We are all in the same boat, and of course people in the same boat sometimes have different opinions, and sometimes there may be disputes on some issues, but after all We are in the same boat. It is not what some people say as if it is a kind of infighting and who will replace who.”

In response to the impact of digital RMB advancement on RMB internationalization, he said that the modernization and digitization of the RMB payment system will help to a certain extent to improve the status of the RMB and its cross-border use, but it is not too much help. 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 factors.

In response to the debate on controlled anonymity, Zhou Xiaochuan said that the concept explicitly proposed by China’s DC/EP is called controlled anonymity, and it is not a mathematically precise point in terms of controlled anonymity itself, but it expresses the meaning of protecting privacy and anti-money laundering and anti-drug transactions, and finding a balance point in between.

“We can study in depth where this balance point is, but do not take this matter intentionally or deliberately to belittle or attack the DC/EP process.” Zhou Xiaochuan said.

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