China will on January 1 launch an “action plan” to increase the governance and operation of its digital currency, a deputy governor of the country’s central bank said on Monday.
“The future digital yuan will be a modern digital means of payment and circulation that is issued and circulated in the financial system,” People’s Bank of China (PBoC) Vice Governor Lu Lei wrote in Financial newsa medium under the central bank.
In the next step toward that goal, a “new generation” digital yuan scheme will be launched on Jan. 1, Lu said, which includes a “measurement framework, management system, operating mechanism and ecosystem.”
The “action plan” will see banks pay interest on customer balances in digital yuan – a move to encourage wider adoption of the currency.
The plan also includes a proposal to establish an international digital yuan operations center in Shanghai’s eastern financial center, the report said.
Monetary authorities around the world have been exploring ways to digitize currencies in recent years, driven by a boom in online payments during the pandemic and the increased popularity of cryptocurrencies such as bitcoin.
The PBoC has been working on a digital currency since 2014 and has been testing the use of a “digital yuan” or “e-CNY” in various pilot programs.
Consumers across the country already widely use mobile and online payments, but the digital yuan could give the central bank – rather than the big tech giants – access to more data and control over payments.
