Bank AI

Zhou Xiaochuan, the former governor of the People’s Bank of China (PBOC), has highlighted the paramount importance of security and cost-efficiency as China continues its pursuit of a Central Bank Digital Currency (CBDC).&nbsp; 
Speaking at a forum in Beijing, <a href="https://finance.sina.cn/bank/yhpl/2023-10-13/detail-imzqxprt7849587.d.html?vt=4&amp;cid=76653&amp;node_id=76653">Zhou shared his insights on the need to safeguard financial </a>systems while reducing the potential for misuse and abuse.&nbsp; 
<h2 id="b-security-a-crucial-factor-in-finance-b">Security: A Crucial Factor in Finance</h2> 
During his address, Zhou emphasized the longstanding significance of security in the financial sector, particularly when it comes to currency. The proliferation of digital technologies and the evolution of financial systems have brought both opportunities and vulnerabilities.&nbsp; 
As technological advancements lower the barriers to entry and enhance the convenience of digital financial transactions, the risks associated with misusing these systems have also diminished. Zhou aptly noted that ensuring the security of CBDCs is of utmost importance to protect against cyber threats, fraud, and unauthorized access. 
<h2 id="b-preventing-abuse-in-cbdcs-b">Preventing Abuse in CBDCs</h2> 
Zhou’s perspective goes beyond general security concerns, extending to the prevention of abuse. He explicitly mentioned the need to combat money laundering and illicit activities like arms trading, which can be facilitated through the use of cryptocurrencies and stablecoins for transactions.&nbsp; 
These concerns are not unique to China, but resonate globally, underscoring the need for comprehensive regulations and safeguards when transitioning from physical cash to digital currency. 
<h2 id="b-the-growth-of-e-cny-b">The Growth of e-CNY</h2> 
The PBOC embarked on its digital currency journey in late 2019 with pilot programs, and in <a href="https://thecoinrise.com/chinas-pboc-launches-test-wallet-for-its-cbdc-e-cny/">January 2022, it unveiled a pilot app</a>. Since its inception, the <a href="https://thecoinrise.com/what-is-chinas-digital-currency-and-why-are-others-racing-to-do-the-same/">digital yuan (e-CNY)</a> trial has expanded to encompass at least 26 locations across 17 provincial-level cities and regions, including key metropolises like Beijing, Shanghai, Shenzhen, and Suzhou.&nbsp; 
<h2 id="b-the-two-tier-system-b">The Two-Tier System</h2> 
Xiaochuan emphasized the importance of maintaining a two-tier system for e-CNY. This architecture comprises two layers, with the PBOC occupying the first tier for issuance, while the second tier comprises commercial institutions, including commercial banks, internet platform companies, and telecommunications operators.&nbsp; 
This design facilitates what Zhou referred to as “dynamic evolution.” In essence, it enables ongoing improvements in service levels and fosters innovation through healthy competition among commercial entities. 
The post <a rel="nofollow" href="https://thecoinrise.com/former-pboc-governor-shares-take-on-chinas-cbdc-development/">Former PBOC Governor Shares Take on China’s CBDC Development</a> appeared first on <a rel="nofollow" href="https://thecoinrise.com">Latest News and Insights on Blockchain, Cryptocurrency, and Investing</a>.

Former PBOC Governor Shares Take on China’s CBDC Development

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