Coronavirus highlights ‘urgent’ need for China’s digital currency, says state-owned bank

China’s e-yuan will allow closer scrutiny of risky investments and help ensure repayment of debt, says Guo Weimin, chief scientist at the Bank of China

In next phase of development, digital currency will be expanded to cross-border transactions using Hong Kong as a conduit, say experts

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The People’s Bank of China is reportedly aiming to release the e-yuan before the start of the Winter Olympics in 2022. Photo: EPA-EFE

Published: 8:46pm, 19 Jan 2021Updated: 9:27am, 20 Jan 2021

The economic challenges caused by the coronavirus pandemic have increased the urgency for Chinese companies to adopt the use of a digital currency, Guo Weimin, chief scientist at the Bank of China, said on Tuesday.

While there is no official timetable for the launch of China’s sovereign digital currency, the People’s Bank of China is reportedly aiming to release the e-yuan, also known as the Digital Currency Electronic Payment, before the start of the Winter Olympics – an event expected to take place in February 2022 in Beijing.

So far, pilot programmes have been rolled out in the Chinese cities of Shenzhen, Suzhou, Xiongan and Chengdu. Digital red packets – based on the gift envelopes traditionally given out during holidays and special occasions – have been provided to consumers for spending at retail shops and restaurants.

Guo said the key advantage of the e-yuan system was its ability to trace cash flow and make it easier to enforce financial regulations, which were absent from traditional payment systems and created huge challenges for the real economy.

There will be a lot of challenges from the pandemic that will make good cases for the use of digital currencies

Guo Weimin

For example, the pandemic has created issues surrounding the collection of debt and collateral by businesses that are struggling to survive. The problem showed the need for a digital system that provided closer scrutiny of payments, said Guo during a panel discussion at the Asian Financial Forum in Hong Kong,

Risky investments in the property market that did not fit the original plan of a project could also be monitored with the digital currency, he said.