Possible Digital Asset Exchange in Beijing
According to a Bloomberg report, part of the guidelines by the State Council could see the creation of a virtual asset exchange in Beijing, the Chinese capital. The idea is part of the plans to push the usage of the digital yuan in the country.
Also, the guidelines also called on banks to establish operating firms for the e-CNY. While the statement did not contain further details about the proposed digital asset exchange, the State Council called for accelerated trials of the CBDC project.
Meanwhile, the government continues to be unwelcoming towards crypto and crypto-related activities. Following a ban on bitcoin trading back in September 2017, China later banned the operation of crypto exchanges, causing many firms to leave the country and move offshore. Over the years, the government has reiterated the ban on crypto transactions.
Earlier in 2021, Beijing also began a clampdown on Bitcoin miners. Several miners across the country were asked to cease operations, citing negative environmental impact. The crackdown not only saw an exodus of BTC miners from China but caused the Asian country its top spot in the global bitcoin hash rate.
China and its Digital Yuan Efforts
China began exploring a digital version of its fiat currency in 2014. Since then, the country has been progressing with its CBDC efforts, with the e-CNY being tested for different use cases.
In June, Xiong’an New Areadebuted blockchain-based salary payments with the digital yuan. Back in April 2020, government workers in Xiangcheng District in Suzhou received 50% of their transportation subsidies in the CBDC.
In July 2021, the e-CNY was, for the first time, used for insurance purposes, with authorities also enabling users in nine different cities to pay electricity bills through the digital yuan wallet app directly. A month later, the digital yuan was used to settle fees in China’s futures markets.
There have also been several red packet events across different cities, which come in lottery form and reward users in the digital yuan. Places like Shezhen and Suzhou have been involved in such events, airdropping millions of dollars in the CBDC to lucky winners.
The People’s Bank of China (PBOC), the country’s central bank released the e-CNY whitepaper, which detailed the progress, design, and features of the project. Interestingly, the whitepaper revealed that the digital yuan has smart contract functionality.
Recently, the Governor of the PBOC, Yi Gang, while speaking at the 30th anniversary of the Bank of Finland Institute for Emerging Economies or BOFIT, spoke on the progress of China’s CBDC efforts. According to Gang, the central bank was focusing on using the e-CNY for domestic retail payment at this current stage.
An excerpt from the PBOC Governor’s speech said:
“Going forward, we will continue to prudently advance RD of e-CNY, improve its design and use. Efforts will be made to establish a management model with reference to cash and bank accounts, enhance efficiency, privacy protection, and anti-counterfeiting features, increase interoperability with existing payment tools, and improve the e-CNY ecosystem.”