The People’s Bank of China (PBoC) last month vowed to “unswervingly further its research” into a digital version of the yuan (RMB). In the subsequent weeks, rumours have swelled that the launch of the world’s first digital national currency was imminent.
To extinguish the speculation provoked by the PBoC’s earlier provocative statement, the bank has now published an interview with its governor Yi Gang.
The senior central banker of the world’s second-largest economy described the PBoC’s recent tests as “just routine work for the research and development of the digital currency”, adding: “No schedule for an official launch has been revealed.”
While these comments may help calm the rumour mill surrounding central bank digital currencies (CBDCs), Yi still maintained China’s determination to be at the forefront of this new technology.
Supplementing the governor’s comments, the Global Times, a state-backed media outet, suggested that CBDC research and development was being stepped up to facilitate post-Covid-19 aid funding and to counter the increasingly bellicose language of the United States regarding trade.
While a digital yuan would provide greater insight and clarity as to where aid funds end up and how they are spent, there are wider concerns as to the lack of privacy afforded by CBDCs in general.
It is one thing for a central bank to control the money supply; it is another for that bank to be able to track exactly how that money is spent and where it is kept. The highly centralised nature of the Chinese state has only amplified these fears.