A sizable portion of the crypto community is currently talking about China’s intentions of launching a digital currency. After all, there is no shortage of nations with the desire of doing so as well, including the European Union and the United States.
While making a presentation at the Caixin Hengqin Forum in Zhuhai, in the People’s Republic of China, the former head of the People’s Bank of China Xiaochuan Zhou stated that the powerful Asian nation will prioritize the development of the digital payment resource for retail use before anything else.
The report was published by Caixin and confirms that one of the country’s primary goals is to use the digital yuan to facilitate retail payments. The former senior official confirmed the sentiment at the start of the week.
Two Different Goals
According to what Zhou explained, “there are two goals for international digital currencies: the first one, which is also what China envisions is to develop digital payment and its use for a retail system in the country, while the other goal is to cross-border payment for international financial institutions.”
While there haven’t been any indications that Chinese authorities will dismiss the second possible use, it becomes clear by judging Zhou’s remarks that they will focus on retail use, at least for the time being.
The two exposed approaches require different designs and technical resources to complete, and it remains a possibility that China expands its capabilities after the successful implementation of the digital payment tool of the digital yuan in retail.
However, not everything will be as smooth as advertised. Zhou has warned that the current environment for China to conduct proper testing of its digital currency is not the smoothest. In fact, a nation with a smaller population would be significantly easier because the cycle for the circulation of the currency is shorter. Instead, China would have to overcome the obstacle stemming from the fact that it is, by far, the most populous country in the world.
A Peek of What’s to Come
“In case there is something wrong, it will be easier to steer the boat into a different direction,” Zhou said regarding the possible repercussions of having such a large population. While he is not leading the Chinese central bank anymore, his thoughts can mean a lot and can give people a peek of how authorities will launch the digital currency DCEP (Digital Currency, Electronic Payment).
It is a common occurrence that the Chinese government and authorities send subtle signals through former executives or senior officials before a big, formal announcement, according to Mable Jiang, currently one of the partners at Nirvana Capital, which is a VC company from Beijing that specializes in fintech.
“I think this is an important signal that China would start pushing retail use of DECP hard in some economies that fit Zhou’s description about smaller population and good internet infrastructure,” were Jiang’s words.
By Andres Chavez