China proposes global rules for all nations regarding central bank digital currencies, setting the stage as we can see in our latest altcoin news today.
China proposes global rules on central bank digital currencies back on Thursday and discussed potential uses and implications of the sovereign digital currency. With the COVID-19 pandemic still expanding and exposing all inefficiencies in traditional payments systems, there has been a need to digitize legacy financial infrastructures and with the rise of cryptos over fiat currencies, central banks worldwide started developing their own CBDCs.
Mu Changchun who is the director of the People’s Bank of China’s digital currency institute laid out the proposals at a BIS Seminar and said:
“Interoperability should be enabled between CBDC systems of different jurisdictions and exchanges. Information flow and fund flows should be synchronized to facilitate regulators to monitor the transactions for compliance.”
He suggested that sovereign digital currencies have to be connected with one another and if they play a role in facilitating global trade, a regulatory framework has to exist. Citing regulatory reasons, Mu outlined the need for a seamless data network that is shared between nations which will be necessary to keep track of the digital footprint that is left behind by outflow and inflow. China is the leader in the CBDC race and as the country already started testing pilot programs, it is heavily focused to be the first and the best. The country banned crypto trading in 2017 but made great progress in experimenting with state-backed digital currencies.
Residents in Bejing received $1.5 million dollars worth of the digital yuan through the early stage CBDC program and China continued experimenting ever since while now allowing commercial banks to provide digital wallets to the residents. If China manages to issue the CBDC successfully, the digital Yuan could become the favorite instrument for international payments and will even chip away at the Dollar’s status as the main currency of the world trade. It still remains to be seen how the United States will react to this news as the US Federal Reserve has only started entertaining the idea of a CBDC but it still lags far behind China.
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