Cryptocurrency NewsAltcoin NewsTracking the Rise of China's Digital Currency in Global Markets

Tracking the Rise of China’s Digital Currency in Global Markets

On Friday, state media reported that an official from China’s foreign exchange regulator mentioned the “programmable features” of a central bank digital currency (CBDC) could boost the efficiency of monetary policies.

China is on the list of nations crafting their own CBDCs – essentially digital money made by central banks. Though, it’s still early days for its mainstream use.

At the moment, CBDCs are viewed mainly as the digital equivalent of physical cash.

However, Lu Lei from the State Administration of Foreign Exchange (SAFE) shared in a forum that, thanks to its adaptable features, central banks might evolve CBDCs to act like M2 money, encompassing certain deposits and savings.

To clarify, CBDC’s programmable aspects mean its settings can be tweaked. Imagine digital money that could expire or be set aside just for specific purchases.

Lu anticipates the People’s Bank of China might look into these features to modify CBDC rates, which might then be leveraged to guide the broader economy.

He also highlighted how CBDC-based international payments could make transactions more secure, easy, and inclusive.

It’s worth noting that last year, Chinese banks joined a cross-border transaction trial led by the Bank of International Settlements.

By the end of June, transactions using China’s digital currency, named e-CNY, reached about 1.8 trillion yuan (roughly $249.33 billion). However, the e-CNY available only represented a tiny fraction (0.16%) of China’s overall physical cash supply.


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