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China should not be in a hurry to use the digital yuan for cross-border payments

© Reuters. Former governor of the People’s Bank of China (PBOC) Zhou Xiaochuan attends the 2019 New Economic Forum in Beijing

BOAO, China (Reuters) – China should not be in a hurry to use the digital yuan for cross-border payments due to regulatory obstacles and foreign concerns over the global impact of it, Zhou Xiaochuan, the former governor of the country’s central bank, said at the Boao Forum on Wednesday. .

China is one of the leading countries in the global race to launch central bank digital currencies to modernize the financial system, avoid the threat of cryptocurrencies like bitcoin and increase speed of domestic and international payment.

The digital yuan, which will primarily be used for domestic retail payments, is likely to be used for cross-border payments but it faces complicated issues like money laundering restrictions, terrorism financing and gambling are limited, Zhou said.

Cross-border payments via the digital yuan are not easy, he said. “We can’t hurry.”

The digital yuan will depend on the Chinese currency’s global position as determined by the Chinese economy, China’s currency stability and ability to convert, Zhou said.

Zhou has dismissed foreign concerns that the digital yuan could pose a threat to the current global financial system. Some in the United States have expressed concern about China’s attempt to topple the dollar to become the dominant global currency.

“Actually, it wouldn’t be that serious,” Zhou said.

The yuan is still behind the dollar in terms of convertibility and free use, Zhou said.

On Sunday, central bank deputy governor Li Bo told the same forum that China will expand its digital yuan testing to more cities, but there is no specific timetable for official implementation.

Li also said internationalization of the yuan would be a natural process and that China’s goal is not to replace the US dollar or other global currencies.

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