According to experts, the new yuan’s digital version is undergoing trials for the international use of Chinese currencies. As the renminbi (RMB, CNY) is becoming one of the world’s most important currencies, the digital yuan will promote the process of “internationalization” of the renminbi.
Additionally, Digital Renminbi is a central bank digital currency (CBDC), issued by China’s central-bank, the People’s Bank of China. Moreover, It is the first digital currency issued by a major economy, with public testing beginning in April 2021.
Significantly, Chinese experts believe that digital yuan will facilitate the process of “Renminbi Internationalization”. The process will become live when Chinese currency becomes the world’s third-largest currency in terms of pricing and settlement.
The e-CNY, the most advanced CBDC, is currently undergoing tests on domestic payments. According to the Chinese publication, the digital yuan is almost ready for cross-border transactions. The tests for e-CNY have a set of rounds, after the trial on domestic retail payments the digital yuan might undergo the next use case as cross-border e-commerce.
Improvement of International Payments
People’s Bank of China (PBOC) recently confirmed its intention to investigate the launch of pilot-programs for cross-border payments using e-CNY. The PBOC will collaborate with counterparts and monetary authorities worldwide to develop regulatory systems and exchange arrangements for digital yuan.
Moreover, one of the PBOS’s aims is to improve the cross-border payments, states the report. Wei Benhua, former deputy director of the State Administration of Foreign Exchange, believes that the e-CNY project’s improvement will promote RMB as well as influence the global monetary system.
The International Monetary Institute’s RMB International Index, an indicator that measures the level of internationalization of the Chinese currency. It increased from 0.02 a decade ago to 5.02 points at the end of last year. According to IMI, the RMB outpaced the Japanese yen and British pound in overseas usage during the first half of 2020.