China is expanding the trial of its digital yuan, but the currency should not be seen as a weapon against the U.S. dollar, central bank Vice Governor Li Bo told conference attendees Sunday (April 18), Reuters reported.
Last year, China launched a trial of its new central bank digital currency (CBDC) in cities including Suzhou, Shenzhen, Chengdu and Xiong’an, Reuters reported. Li told the Boao Forum for Asia that testing is showing the digital yuan, also called the e-CNY, is working well within China’s banking system.
Officials are developing a regulatory framework for the digital yuan, and there is no timetable for the expansion of its use, but that expansion will occur, Li said, per Reuters. Visitors to next year’s winter Olympics in China will be able to use the currency. Over time, the digital yuan will be set up for cross-border payments.
According to Reuters, the U.S.-educated Li said the currency will naturally expand, but Chinese authorities have no plan to see it replace the U.S. dollar, which is the primary medium for international transactions.
Bloomberg quoted Li as having said: “For the internationalization of the renminbi, we have said many times that it’s a natural process, and our goal is not to replace the U.S. dollar or other international currencies. I think our goal is to allow the market to choose, to facilitate international trade and investment.”
Bloomberg reported the administration of President Joe Biden is concerned the digital yuan, in the long run, could replace the dollar for international exchange.
“The motivation for the eYuan, for now at least, is focusing primarily on domestic use,” Li told the forum, Bloomberg reported. “[International] interoperability is a very complex issue, and we are not in a hurry to reach any particular solution yet.”