PBoC to update digital yuan app as CBDC push intensifies
Meanwhile in the US, the Biden administration places “highest urgency” on digital dollar research
The People’s Bank of China (PBoC) is set to introduce the first ever update for its digital yuan app.
The digital yuan app 1.07 update has been designed for use with the next update to Apple’s operating system. Apple’s iOS 15.4 update will offer the possibility of greater accessibility, with voice-inputted passwords and improved facial recognition functionality.
China has been at the vanguard of the global push to develop and introduce central bank digital currencies (CBDCs), digital versions of state-backed currencies.
Having undertaken a number of trials with the cooperation of the country’s leading technology firms in 2020 and 2021, the PBoC launched its pilot scheme earlier this year. The digital yuan launched in 11 Chinese cities and regions, and was also available to foreign attendees of the Beijing Winter Olympics.
Attitudes towards CBDCs
Attitudes towards CBDCs vary greatly. Those in favour of state-backed digital currencies argue that they will make transactions more efficient and could provide services to previously ‘unbanked’ populations. Advocates also argue that the technology which underlines CBDCs will reduce fraud, as it enables a greater level of traceability.
Sceptics have argued that this traceability is more of a threat than a benefit, as it will enable governments to monitor and control the finances of citizens more directly.
Some, such as Hiromi Yamaoka, the man who previously led the Bank of Japan’s CBDC research, have also outlined their concerns that the public will be more exposed to the effects of inflation once state-backed digital currencies become go-to tools for mass payment.
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The US and CBDCs
CBDCs have also started to factor into the geopolitical thinking of the United States
Last month, Senator Pat Toomey, the ranking member of the US Senate’s banking committee, warned in a letter to Secretary of State Antony Blinken and Treasury Secretary Janet Yellen that a digital yuan could be used “to subvert US sanctions, facilitate illicit money flows, enhance China’s surveillance capabilities, and provide Beijing with ‘first mover’ advantages, such as setting standards in cross-border digital payments.”
The pace of research into a possible digital US dollar has thus far been measured. Federal Reserve chair Jerome Powell has argued that it is important to make the right decisions and not to rush development simply in order to be first.
However, with the central banks of India and Russia also outlining their intention to launch CBDCs in the near future, this cautious approach has been increasingly trumped by a desire not to fall behind.
President Joe Biden’s executive order on digital assets last week stated: “My administration places the highest urgency on research and development efforts into the potential design and deployment options of a United States CBDC.
“My administration sees merit in showcasing United States leadership and participation in international fora related to CBDCs and in multi‑country conversations and pilot projects involving CBDCs,” the order said.