Speaking at a forum in Beijing, Zhou Xiaochuan said that security has always been one of the most important issues in finance. With the development of technology, the risks of misuse of funds are also increasing, so the digital yuan can be used to prevent breaches, not just to reduce user fees.

“With the advent of cryptocurrencies and stablecoins, trading weapons during military conflicts and selling drugs, including fentanyl, has become much easier for criminals. The introduction of digital yuan will prevent these illegal activities,” Xiaochuan said.
He noted that the e-CNY should be used in a two-tier system. The first tier is directly the NBK issuing the digital yuan, while the second tier includes commercial banks, internet platforms and telecom operators dealing with users. Xiaochuan added that it is equally important to apply CBDC for international settlements and payments.

The NBK has started launching digital yuan pilot projects from the end of 2019. Authorities have already managed to test the central bank’s digital currency in at least 17 cities and provinces, including Beijing, Shanghai, Shenzhen and Suzhou. In July, in honor of a shopping festival, the administration of China’s Jiangsu province held a digital yuan giveaway totaling $700,000 between local residents.

By Linda

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