China Wants Global Rules for CBDC, Says Digital Yuan Will Co-Exist With AliPay and WeChat Pay

China’s central bank - People’s Bank of China (PBoC) - is making a bold move and has requested for global rules for the functioning of central bank digital currencies (CBDCs). As we all know that PBoC is one of the forerunner in the CBDC race among global central banks.

On Thursday, March 25, Mu Changchun, the director-general of the PBOC’s digital currency institute put forward the new proposal at a seminar held by the Bank of International Settlements (BIS). Mu has proposed for global rules for CBDCs explaining how they can be used worldwide while taking care of some matters like information sharing and monitoring.

In the details accessed by Reuters, Mu said: “Interoperability should be enabled between CBDC (central bank digital currency) systems of different jurisdictions and exchange. Information flow and fund flows should be synchronised so as to facilitate regulators to monitor the transactions for compliance.”

With public cryptocurrencies like Bitcoin gaining mainstream acceptance, central banks are pushing forward and accelerating their CBDC development. Mu said that other major reason behind having its CBDC to protect the country’s monetary sovereignty against threat posed by cryptocurrencies like Bitcoin.

China has said that it would further quicken its pilot program to develop the Digital Yuan. Besides, it also seeks to boost up its consumption to boost economic growth. One of Mu demand with the BIS its to have a “fair supply of digital currencies” by central banks worldwide thereby ensuring the financial stability of the global monetary system.

A “digital currency supplied by one central bank should not impede another central bank’s ability to carry out its mandate for monetary and financial stability,” he said.

He further added that the Digital Yuan shall co-exist with Alipay and WeChat Pay. The two currently dominate China’s digital payments landscape. Mu said that one of the primary reason behind developing its digital currency is to create a back up for WeChat Pay and Alipay.

“If there is something bad happens to them, financially or technically, that could bring negative impact on the financial system’s stability in China,” said Mu. “To provide a backup or redundancy for the retail payment system, the central bank has to step up” and provide digital currency services, he said.