International General: International: News: Hankyoreh Mobile

The People’s Bank, the central bank of China, is actively trying to increase the yuan into an international currency by developing digital currency, such as conducting a technology test for international settlement of digital currency with the Hong Kong Financial Services Authority. Hong Kong reported on the 3rd that the People’s Bank has begun a technology test of’digital yuan’ payments between China and Hong Kong, and has expressed its willingness to actually work in international payments in the future. Unlike private virtual cryptocurrencies such as Bitcoin, digital yuan is one of the currencies (central bank digital currency, CBDC) officially issued by the central bank, which is a currency issuing institution. Digital currency is being actively researched by central banks in several countries, including Sweden, and the People’s Bank of China is the fastest-moving institution in recent years. China sees the digital yuan as a vehicle to challenge the US dollar’s dominance in the global economy. People’s Bank has already conducted pilot projects in major economic bases such as Shenzhen, Suzhou, and Beijing, and the amount of digital yuan distributed so far for this is 200 million yuan (about 34 billion won). Digital Yuan, whose official name is’Digital Money Electronic Payment’ (DCEP), was originally designed for small-scale retail transactions, but can be used for offshore payments across borders, said Wang Xin, Director of Research at People’s Bank. Director Wang explained, “If the conditions are mature and the market demands, the offshore payment of digital yuan will be possible.” Hong Kong is currently being used as a base for internationalization of the yuan by issuing yuan denominated bonds. It is not unrelated to this attempt to internationalize the yuan that the People’s Bank has launched a trial for offshore settlement with the Hong Kong Financial Authority. China is also trying to strengthen cooperation with Thailand and the United Arab Emirates for international payments through digital currency. To this end, the People’s Bank participated in the’mCBDC Bridge’ project initiated by the Financial Supervisory Service of Hong Kong and the Central Bank of Thailand (mCBDC) in February. The UAE Central Bank is also involved in this project. According to the International Settlement Bank (BIS), the project aims to lower the cost of international money transfers and increase the transparency of money transactions. This project aims to establish an international transaction network that connects the digital currency settlement network of individual countries by participating in central banks, private commercial banks, and foreign exchange markets. Many experts pointed out that China’s international cooperation on digital yuan is viewed as a defensive move to cope with the conflict with the United States. However, considering that the share of international payments in the US dollar last year reached a new low of 59% in 25 years, some view it as an active attempt to strengthen the international status of the yuan. China’s movement to develop digital yuan is stimulating the development of digital currency in other countries, including the European Central Bank (ECB), the newspaper reported. In this regard, Agustin Karstens, governor of the International Settlement Bank, recently pointed out that “the design of the central bank’s digital currency should be done by global collaboration rather than competition.” Shin Ki-seop, senior reporter [email protected]