China has proposed global rules for how central bank digital currencies (CBDCs) should operate, Reuters reported.
The rules deal with issues such as CBDC use, monitoring and information sharing, according to Reuters. People’s Bank of China (PBOC) Director General of the Digital Currency Institute Mu Changchun presented the new rules at a recent Bank for International Settlements (BIS) seminar.
He said there should be interoperability between CBDC systems of different jurisdictions and exchange. He also said information flow should be “synchronized” in order to allow regulators the ability to monitor the transactions for compliance, Reuters reported.
He added there should be a “scalable and overseen foreign exchange platform,” supported by distributed ledger technology (DLT) like blockchain, per Reuters.
There are numerous countries working on some type of CBDC concept, and as digital currencies like bitcoin continue to grow in popularity, including gaining fans in mainstream tech companies and financial entities, central banks will be more likely to respond to what they perceive as a threat, issuing digital cash of their own in order to stave off rival independent types, according to Reuters.
The PBOC is likely to be the first major bank in the world to issue a CBDC as it has already been working on ways to internationalize the yuan and decrease dependence on the global system dominated by the dollar, Reuters reported.
The European Central Bank is also looking at debuting a CBDC, although it may face opposition from Germany, where leaders fear that debuting a digital currency would damage banks, according to Reuters.
In China, the introduction of a digital yuan won’t affect the payment services of the country’s big apps like WeChat Pay or Ant Group’s Alipay, PYMNTS reported. The digital yuan could serve as a backup to those apps should they have financial or technical problems.