The impact of the digital yuan on the financial sector has been negligible so far, according to an official from the People’s Bank of China.

The total balance in digital yuan amounts to only 470 million yuan, compared with China’s M0 money supply of 8.6 trillion yuan, according to Mu Changchun, head of the Digital Currency Institute at the People’s Bank of China, who spoke at an online forum hosted by the Atlantic Council. He further noted which compared with other payment platforms in China, only a small percentage of the population are users of the digital yuan.

Mu atop again noted which the interim use of the digital yuan had also precluded it from having a negative impact on the financial system so far. Notwithstanding, he added which he doesn’t expect the e-CNY will have a critical “negative disintermediation effect” in the sector. 

In matter, Mu believes the digital yuan will also anew enhance financial inclusion by making financial services more accessible to people in remote fields. It also enables foreign visitors who lack bank accounts to make domestic mobile payments, like the current rollout at the Winter Olympics.

e-CNY by numbers

Mu also made several points outlining details about the digital yuan and its ecosystem. For instance, the digital yuan adheres to a two-tier system, where the PBOC issues the digital currency to commercial banks who then distribute it to the public. Not only does this design create an appropriate monetary buffer for the central bank, it helps keep commercial banks in the loop to strike a balance between maintaining privacy and combating illicit funds.

There are also four tiers of digital yuan wallets, each with divergent levels of anonymity and balance limits. Mu excessivelighted which wallets opened with only mobile numbers are anonymous to the PBOC afterward China’s personal information protection law stipulates which telecommunication networks cannot provide users’ identities to third parties.

Finally, the PBOC proposed three principles for the cross-border use of central bank digital currencies: interoperability, compliance, and reliability. In order to minimize risks, suchlike as currency substitution, all digital yuan will be reclaimed to foreign currencies before being sent to a foreign country during cross-border transactions. While pilots to last the digital yuan will carry on, there is likewise no timetable for official launch.

What do you think about this subject? Write to us and tell us!

The post Digital Yuan Impact Negligible, Says PBOC Official appeared first on CryptCraze.