The Vice-Governor of the People’s Bank of China (PBC), Lu Lei, stated this Monday (1) that the digital yuan could make cross-border payments with Lusophone countries “safer, more efficient, and more transparent.”
The digital yuan – the world’s first state-backed digital currency- began development by the Chinese central bank in 2014, with technical trials conducted in several cities from 2019 onwards.
According to the PBC official, the currency already has an ecosystem capable of supporting online and offline payments, smart contracts, and “greater regulatory transparency.”
“With the transition of the digital yuan from version 1.0, similar to physical cash, to version 2.0, which functions as a deposit currency, China presents an innovative solution for the evolution of the global monetary system,” said Lu during a seminar on central bank digital currencies and cross-border applications held in Macau.
The event was organized by the Monetary Authority of Macau, aiming to “deepen financial cooperation and explore digital currency applications” between China and Lusophone markets.
“According to the latest official data, since its official launch in 2019, cumulative transactions in digital yuan have reached 16.7 trillion yuan (2.11 trillion euros) up to November last year”
The Chinese central bank is intensifying efforts to expand the use of the digital yuan domestically and internationally, offering incentives and guidance to banks to broaden its application in different areas, including cross-border payments.
“The digital yuan was created as a digital substitute for physical cash, to modernize the payment system and strengthen monetary sovereignty,” said Mu Changchun, Director of the Digital Currency Research Institute of the PBC, at the same event.
“Today it already supports online and offline payments, smart contracts, and integration with systems from other countries,” he added.
The banking representative also noted that a cross-border digital yuan transfer service project is already operating to facilitate international bilateral payments.
“This allows foreign financial institutions to connect through a single platform, offering digital payment services 24 hours a day,” Mu explained.
Chinese central bank representatives emphasized that high costs and low efficiency in international payments can be overcome with new digital infrastructure, highlighting Macau’s role as a connectivity platform.
Macau is developing its own central bank digital currency, the digital pataca, which is expected to function as legal tender in parallel with physical cash.
The Monetary Authority of Macau has also recently joined the mBridge pilot project, a multilateral central bank digital currency platform involving central banks in Asia and the Middle East.
“We hope that through the interconnection between the digital pataca and this platform, we can establish closer cooperation with Portuguese-speaking countries,” said the PBC Vice-Governor.
Source: Lusa
