FameEX Hot Topics | Bank of China Requires Retailers to Provide Digital Yuan Payment Choice

As China advances its central bank digital currency (CBDC) through technological and business model enhancements, an opportunity arises for its integration into all online retail payment systems, as outlined by Changchun Mu, the director of the Digital Currency Research Institute of the People’s Bank of China, on September 3. Speaking at the annual China International Service Trade Fair, Mu expressed the ambition of digital yuan developers to seamlessly integrate the currency into every retail context. He noted that the Chinese CBDC, also known as the renminbi, has recently undergone significant upgrades in terms of its organizational structure and business model. Now, the focus is on upgrading payment tools to align with these advancements.

Mu addressed various payment platforms such as commercial banks' applications, WeChat, and Alipay, emphasizing their responsibility to adhere to regulations. In the short term, they are encouraged to adopt CBDC QR codes, while in the long term, they should work towards enhancing their payment systems.

The issue of wholesale payments was also discussed during Mu's address. He suggested that instead of a complete overhaul of the existing interbank payment and settlement systems, integration of the CBDC payment option into the current framework would suffice. However, specific technical details about this integration were not provided in his speech.

China remains dedicated to developing a blockchain-backed digital infrastructure that remains under strict control. In August, Chinese government officials introduced a new data exchange powered by blockchain technology. The newly established Hangzhou Data Exchange aims to streamline the exchange of corporate information technology data using distributed ledger technology.

The push to incorporate the digital yuan into various payment systems aligns with China's broader strategy to assert greater control over its financial systems and promote wider adoption of its CBDC. By emphasizing technological upgrades and integration with existing platforms, China aims to create a seamless transition towards the use of digital currency in everyday transactions, fostering greater efficiency and oversight. The ongoing developments in China's digital currency landscape highlight the country's determination to pioneer digital financial innovations and set trends in the global financial technology sector.

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