- Bank Of China Says Digital Yuan Will Not Cause Inflation
Central Bank of China claims that digital Yuan will not cause inflation.
The Bank of China’s secretive digital currency tests have led to tremendous curiosity among Chinese citizens. Recently, the bank responded with an official explanation of the proposed digital Yuan and how it would work.
A bank representative confirmed on the China Central Television on April 19 that the new digital currency (also referred to as DC/EP, for “digital currency/electronic payment”) pilot test has been carried out in the cities of Shenzhen, Suzhou, Xiongan new area, Chengdu, and the future site of the winter Olympics.
However the researcher stressed that these current tests do not imply that the digital Yuan has been officially issued for public use. The representative added:
“The current closed test of digital Yuan will not affect the commercial operation of listed institutions, nor will it affect the RMB issuance and circulation system, financial market and social economy outside the test environment.”
In order to ensure that the central bank’s digital currency is not oversold, commercial institutions will pay a 100% reserve to the central bank, says the institution. In other words, at the time of issuance, the People’s Bank of China will first exchange the digital currency to banks or other operating agencies. These agencies will then release the digital currency into public circulation.