A session titled "DigitalPayment and DigitalCurrency" is held during the Boao Forum for Asia Annual Conference in Boao, south China's Hainan Province on April 18, 2021. (Xinhua/Zhang Liyun)
BEIJING, April 22 (Xinhua) -- The global bloom of Central Bank Digital Currency(CBDC) is putting market focus on the momentum of digital renminbi (RMB), the internationalization of CBDC and the differences between digital currency and digital asset.
Digital currency is becoming a focal point concerning global financial reform. At this point, China is aiming to upgrade and facilitate its domestic retail system by further exploring its ditital currency, said the country's monetary authorities and experts at the sub-forum of Boao Forum for Asia Annual Conference 2021 held on April 18 in Boao, south China's Hainan Province.
--CBDC Experiences
Technical development, especially the popularization of Internet terminals and China's huge retail market demand, produce a more convenient, more effective and less expensive payment system, according to Zhou Xiaochun, Vice Chairman of the Boao Forum for Asia and former Governor of the People's Bank of China (PBOC), who added that a sound retail system featuring with digital currency is the basis for the operation of various businesses.
Li Bo, deputy governor of the central bank said that China has learnt a lot from its digital RMB pilot projects.
"We adopt the two-tier digital currency system that supports existing currency and banking systems and minimizes the risks coming along with financial disintermediation." said Li Bo.
Li added that the central bank is now capable of controllable anonymity of digital RMB transactions, which means small-amount transactions will be anonymous and large-amount transactions be traceable.
Li Bo said the central bank's hybrid system is an attempt to link up digital RMB with accounts, quasi-accounts and token money.
While continue expanding the coverage of pilot projects across China, the central bank will also build the infrastructural ecosystem for digital RMB including solid technical safety and stability, and establish the regulatory regime, according to Li Bo.
The central bank also pledges to create more scenarios to be tested in more cities. Li Bo said the digital RMB may be applied to diverse scenarios for Chinese and foreign users in the upcoming Beijing Winter Olympics.
--Probe into DC Internationalization
Central banks worldwide are probing into digital currency development frontier.
According to Agustín Carstens, General Manager of the Bank of International Settlement (BIS), CBDC may be internationalized in three manners, including compatibility between CBDCs, a more closed loop created by interconnection links through interfaces, and a compatible integrated CBDC network that makes cross-border payment even more effective and convenient.
Li Bo holds that China should explore various ways, test various technologies, stand open-minded to create sound digital RMB and a healthy ecosystem, and strengthen cooperation with international partners.
Zhou Xiaochuan said that central banks' monetary sovereignty is the premise and must be respected.
Central banks worldwide are making efforts to improve CBDC inter-operability. Hong Kong Monetary Authority, Bank of Thailand, Central Bank of the UAE and China's central bank Digital Currency Institute in February co-launched m-CBDC Bridge project to explore the application of CBDC in cross-border payment.
Assistant Governor of Bank of Thailand said the project may further facilitate the application of CBDC in cross-border payment and bring in more central banks.
--Digital asset must serve real economy
Digital asset is also under the market spotlight. Participants in the forum reached connsensus that risk prevention shall be enhanced and that both digital currency and digital asset must serve real economy.
Zhou Xiaochuan suggested distinguishing digital currency from digital asset and maintaining strong vigilance for digital asset.
Digital assets as an investment option is not currency but an alternative investment, said Li Bo adding that crypto asset is expected to mainly serve as an investment vehicle or alternative investment in the future.
Digital asset is catching more attentions in the financial market while stronger regulatory rules shall be introduced. Li Bo added that any future virtual currency shall be subject to as strict regulation as that imposed on banks and quasi-banking financial institutions, in order to prevent financial risks.
(Edited by Jiang Feifan with Xinhua Silk Road, 346129473@qq.com)
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