China will on 1 January launch an “action plan” to boost the management and operations of its digital currency, according to a Deputy Governor of the People’s Bank of China (PBoC).
“The future digital yuan will be a modern digital payment and circulation means issued and circulated within the financial system,” PBoC Deputy Governor Lu Lei wrote in Financial News, a media outlet affiliated with the central bank.
Lu said that as part of the next phase, a “new generation” framework for the digital yuan would be introduced from January 1, covering a measurement framework, management system, operating mechanism and ecosystem.
Under the action plan, banks will begin paying interest on digital yuan balances, a move aimed at encouraging wider adoption of the currency. The plan also includes a proposal to establish an international digital yuan operations centre in Shanghai, China’s eastern financial hub.
Monetary authorities globally have been accelerating efforts to digitalize national currencies, driven by the surge in online payments during the COVID-19 pandemic and the growing popularity of cryptocurrencies such as bitcoin.
The PBoC has been developing a digital currency since 2014 and has conducted multiple pilot programmes involving the digital yuan, also known as e-CNY.
While consumers in China already make extensive use of mobile and online payment platforms, the digital yuan could enable the central bank, rather than large technology companies — to gain greater access to transaction data and enhanced control over the payment system.
