China which is working on the ‘Digital Renminbi,’ popularly known as Chinese Yuan in the west. Reportedly, the Central Committee of the Communist Party of China and the State Council, China’s cabinet, has issued a new set of guidelines for one of the four Special economic zones in China – Shenzhen.
According to the guidelines, the authorities will,
Support innovative applications such as digital currency research and mobile payment in Shenzhen. Promote interoperability with Hong Kong and Macao financial markets and mutual recognition of financial (fund) products.
Shenzhen is the hardware manufacturing hub of the country and one of the most important industrial areas in the country. It has some degree of economic freedom given by China as an exclusive economic zone.
The PBoC had not revealed the complete design of its Digital Renminbi plans. Mu Changchun, the Central Bank’s Chief Deputy, had said earlier this month that the currency is ‘nearly ready’ for launch.
However, it had asserted two critical characteristics of it. It won’t be a cryptocurrency. Nevertheless, it will be interoperable with all payment systems in the world, including cryptocurrencies.
China is promoting digitalization of its currency intending to ‘internationalize’ the Renminbi. This would benefit the economy of China as its currency demands would increase. It added in the guidelines,
In the promotion of the internationalization of the renminbi, we will pilot and explore innovative cross-border financial regulations.
It comes at the wake of the Libra announcement, which aimed to provide a global currency to the world backed by a basket of currency/assets. China, which has already implemented digital payments through Alipay, Tencent, and Ant Financial, now further aims to expand the Renminbi globally.
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