The People’s Bank of China (PBOC) has established a digital yuan operations centre in Shanghai, fostering the internationalisation of China’s currency.
According to state-run media Xinhua News Agency, the move is among the eight new initiatives announced by the PBOC. The bank also focuses on creating a multi-polar monetary system, where multiple currencies support the global economy, and believes in the importance of advancing the yuan’s internationalisation at the same time.
Digital yuan, cross-border payments, and stablecoins
The establishment in Shanghai aims to promote fintech developments in the digital financial ecosystem. The centre will also focus on three key platforms, including one for cross-border payments, one for blockchain services, and a crypto platform. The cross-border digital payment rail explores the use of the digital yuan, dubbed eCNY, in transactions across borders. Additionally, the blockchain and digital asset platform will allow onchain payments and near-instant crypto transfers.
The National Institute of Financial Research of Tsinghua University believes that this contributes to improving China’s influence in the global landscape, providing an open and inclusive Chinese solution for optimising the global cross-border payment system. China is already testing the digital yuan through domestic pilot programmes after years of trying to internationalise its currency. During the sandbox, eCNY was utilised for everyday retail payments, government disbursements, salary transfers, and public transportation fees.
Even though historically, Beijing has been wary of crypto, it recently started embracing blockchain technology for its transparency and traceability. The hub follows growing tensions with the US trade and tech issues, and it aims to reduce reliance on the USD-dominated financial system. The PBOC is committed to supporting the steady development of the CBDC international operations centre, offering help for the facilitation of cross-border trade, investments, and financing, according to the bank’s representatives.
