China’s CBDC to be regulated in line with fiat laws, says bank governor

14 Sep 2020

China’s digital yuan should be regulated in line with fiat currency-related regulations, according to a senior executive at the central bank.

On Monday, a deputy governor of the People's Bank of China (PBoC), Fan Yifei highlighted the key regulations for the operations of China’s central bank digital currency (CBDC), the digital version of the official currency of the People’s Republic of China.

According to the deputy governor, the digital renminbi is legally compensatory to traditional fiat currency, and is “mainly positioned” as M0, meaning it is part of the supply of notes and coins, Cointelegraph reports.

As a result, the digital renminbi “needs to comply with laws and regulations related to cash management”, the PBoC governor added.

Fan Yifei went on to add that as per the renminbi's indemnity provisions, the CBDC may be utilised to pay “all public and private debts within the territory of our country.”

The deputy governor stressed that the digital currency should be accepted throughout the country and “no unit or individual may refuse to accept it if the conditions are met.”

Fan Yifei also stated that the central bank digital currency must comply with all laws and regulations in regard to cash management, Anti-Money Laundering and tackling terrorist financing.

According to reports, the digital yuan is being tested out in various regions of China, including Beijing, Tianjin, Hebei, as well as the Hong Kong Greater Bay area. In addition, at the end of last month, Reuters reported that China’s central bank is planning to use the digital currency at the Winter Olympic Games in 2022.

A representative of the Chinese Ministry of Commerce said last month that the trials will cover the majority of the country’s wealthiest regions. In addition, poorer central and western regions will also be part of the testing.