In a significant development, according to Changchun Mu, director of the People’s Bank of China’s Digital Currency Research Institute, China’s CBDC, the digital yuan, is undergoing major upgrades.
Digital yuan integration for retail scenarios
Mu spoke at the China International Service Trade Fair, emphasising the importance of wallet providers enabling digital yuan payments in all retail scenarios.
Mu particularly addressed prominent commercial banking apps like WeChat and Alipay, reminding them of their obligation to adhere to regulatory standards.
However, the key transformational aspect is centred around retail transactions. The aim is to integrate the digital renminbi, also known as the digital yuan, as the preferred payment method across a wide spectrum of platforms and retail scenarios.
However, a crucial caveat is that these platforms must operate within the framework of regulations, secure the necessary financial licences, and operate under governmental supervision.
In the immediate future, the focus is on standardising QR codes and achieving mutual recognition of barcodes.
Over the long term, substantial upgrades to payment tools will be implemented. This evolution will maintain existing business and regulatory models, ensuring a seamless transition.
The wholesale payment landscape will also see adjustments.
The central bank’s digital currency system will not replace current interbank payment systems and commercial bank intranets that support wholesale payments. Instead, they will be integrated and interconnected with the digital renminbi.
China has been actively developing its blockchain-based digital infrastructure, including the digital yuan.
In August, officials unveiled the Hangzhou Data Exchange, which utilises blockchain to streamline the exchange of corporate IT data.
Mu’s remarks highlight China’s commitment to ensuring the availability of the digital yuan in all retail payment scenarios, pushing stakeholders to prioritise compliance and get required financial licenses.
The central bank has been testing digital yuan in a number of pilot zones, but wider adoption is still a work in progress.
Mu also recommended adopting the digital yuan for wholesale financial market settlement, leveraging smart contracts to improve payment efficiency.
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