As China draws ever closer to fully rolling out its central bank digital currency (CBDC), one central bank official calls for legal clarity from the government. The official wants the existing laws amended to accommodate the digital yuan and lay out the legal parameters for its use.
China has continued to step up its efforts as it seeks to become the first major global power to launch its own digital currency. According to the People’s Bank of China (PBoC), as of the end of 2021, over 87 billion yuan ($11.2 billion) had been transacted by Chinese residents across the several dozen trials in major cities. The number of digital yuan wallets stood at 261 million at the time.
But as the Asian giant braces itself for the national digital yuan rollout, one top official has urged the government to provide legal clarity to the users and commercial banks.
Guo Xinming, the president of the PBoC’s Nanjing branch, proposed some amendments to the administrative law governing China’s legal tender to include the digital yuan. He was speaking at the country’s annual plenary session recently, where the two central political bodies in China confer on the way forward for the world’s second largest economy.
Xinming believes that China should amend the law, which currently states that renminbi, which is the legal tender for the country, refers to paper notes and coins issued by the PBoC. He told the session that the law is unclear on the provision of cash in new formats, specifically digital formats.
The relationship between the physical yuan and the digital yuan has yet to be laid out clearly by the law, he said, as well as the duties and responsibilities that commercial banks shall bear with the CBDC.
Xinming also proposed that the law should be amended to include new entities that shall crop up with a focus on the digital yuan solely, including demanding that they must meet the needs of consumers during special circumstances such as natural disasters and network failures.
As CoinGeek reported back in October 2020, the PBoC proposed a draft bill that sought to make the digital yuan legal tender. The bill was meant to amend existing laws to include a digital form of the renminbi as legal tender.
To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, read nChain’s CBDC playbook.
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