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The digital yuan will fight the “dollarization” of the US, says the former governor of the People’s Bank of China

October 29, 2020

The focus of China’s digital currency will favor the domestic retail system and prevent dollarization of the economy. according to a former senior official.

Zhou Xiaochuan, chairman of the China Financial Association and former governor of the People’s Bank of China (PBoC), announced this to attendees at a conference at the Eurasia Forum on October 27th The central bank’s approach to creating a digital currency differs significantly from that of the group of seven countries: Canada, France, Germany, Italy, Japan, the UK and the US.

According to Xiaochuan The G7 dealt primarily with “the challenges that Libra, Bitcoin and other similar encrypted digital currencies pose”. China’s central bank has focused on using its digital currency for retail customer payments domestically and preventing the US dollar from becoming a more common medium of exchange in the country.

The digital yuan will fight the “dollarization” of the US, says the former governor of the People’s Bank of China
The digital yuan will fight the “dollarization” of the US, says the former governor of the People’s Bank of China

“In China, we have [estado] work very hard to promote DCEP – that is digital currency – and electronic paymentXiaochuan said, “Indeed The focus and main point of our concept and content are different from the G7 principle. “

“We have to prevent dollarization. This is one of the most important design points of the Chinese DCEP. “

Countries representing the world’s largest economies have openly voiced concerns about Facebook’s launch of the Libra project.and calls it a threat to the global financial system. In a draft statement released on October 12, G7 members said they would initially speak out against a global stablecoin project without proper regulatory oversight.

According to reports Canada’s central bank officials have prepared their own CBDC if regulators block the Libra project. Bank of Canada Governor Tiff Macklem said today that central banks need a “globally coordinated” strategy to develop a digital currency that will prevent misuse by criminals.

The Chinese central bank recently launched a pilot program to test their digital yuan $ 1.5 million raffle among 47,500 people in Shenzhen City. Although the CBDC was not officially published by the People’s Bank of China, it recently drafted a bill that provides a legal framework and legitimacy for the digital currency. The law can be consulted publicly until November 23.

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