Zhou Xiaochuan: China has no plan to use the e-CNY to replace the US dollar’s status as reserve currency or the international payments currency

The former head of the People’s Bank of China (PBoC) has taken further pains to reassure observers that China has no plans to use the Digital Currency Electronic Payment (DCEP or e-CNY) to either replace the greenback as the global reserve currency, or to make domestic third party payments systems obsolete.

Zhou Xiaochuan (周小川)

Zhou Xiaochuan, former head of the Chinese central bank commented on 22 May at the 2021 Tsinghua / PBoC School of Finance Global Finance Forum held in Beijing.“The original goal of its design and the direction for which we are striving is not at all to replace the US dollar’s status as reserve currency or the international payments currency.”

“The development of the DCEP is mainly focused on modernisation of the domestic payments system, and keeping pace with the digital economy and the Internet era. It will raise efficiency and reduce costs, especially for retail payments services.”

The former central bank chief said that ongoing trials of the e-CNY which were first launched in April last year will not serve as the key driver behind internationalisation of the Chinese currency.

“The modernisation and digitisation of the renminbi payments system will be of definite help to raising cross-border usage of the renminbi, but won’t be of huge assistance,” said Zhou.

“Internationalisation of the renminbi will be determined more by choices in systems and policies, and determined by the progress of China’s reform and opening, as opposed to technical factors.”

Zhou also sought to dispel reports that the e-CNY will replace third-party payments systems in China, such as those developed by Ant Group and Tencent.

“This also is absurd talk,” said Zhou, pointing out that Chinese commercial banks and several of the leading third party payments organisations in China all participated in the research and development of the e-CNY.

“Everybody is in the same boat, and at times the people in the boat will have different opinions, and sometimes they may even engage in dispute over certain issues. But it’s still the same boat, and there is no case where someone is replacing anyone else.”

Zhou Xiaochuan (born January 29, 1948) served as the Governor of the People’s Bank of China from 2002 to 2018. In 2001, his policies led to a stock crash, forcing him to revise his outlooks. He earn a Ph.D. in economic systems engineering (1985) from Tsinghua University in Beijing.

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