A few weeks ago, the Chinese Ministry of Commerce expanded its digital currency electronic payment system testing program. Local media wrote that the regulator has begun testing commercial transactions in various sectors of the economy, including e-commerce and hospitality.
The deputy chairman of the People’s Bank of China emphasized that the digital yuan belongs to the same asset as cash. This means that CBDC is part of their offering and is subject to the same regulatory requirements.
The digital yuan – the digital currency of China’s central bank (CBDC) – must be subject to cash-related laws. Fan Yifei, deputy chairman of the People’s Bank of China, stated this in an article in which he outlined the basic principles of regulation of the national cryptocurrency.
According to Yifei, CBDC is de jure the digital equivalent of traditional fiat currency. He stressed that the digital yuan is “predominantly attributed” to the M0 monetary aggregate, which includes only cash in the national currency in circulation outside the banking system.
According to the deputy chairman, this means that the CBDC is part of the offer of paper banknotes and coins, and “must comply with the laws and regulations regarding cash management.” This is also true for acts of combating money laundering and terrorist financing.
At the same time, CBDC is “a publicly available product provided by the central bank to the public.” The regulator will not charge a commission for the exchange and use of the payment instrument. The official recalled that commercial banks will be engaged in converting fiat currency into digital.
Yifei also noted that CBDC can be used to pay “all public and private obligations in the country. He drew attention to the fact that digital currency must be accepted everywhere in the country, and “no [government] unit or individual can refuse to accept it if all conditions are met.”