People's Bank of China strengthens their language used towards its pursuit of a digital yuan

In a recent notice, the People’s Bank of China stated they “will undoubtedly further its research and development of the national digital currency with enhanced top-down design.” This is the third straight year the PBoC has mentioned pursuing a digital yuan in their annual National Currency, Gold, Silver, and Security Work Video and Telephone Conference. In addition to its continued work on digital currencies, they also mentioned the need to reform cash management and prevent the use of counterfeit notes.

Why it matters

• The PBoC has been one of the most vocal central banks across the world with respect to its intention to digitize their money. The strong language of their most recent announcement demonstrates that they are becoming increasingly more active in their build-out of a digital yuan.
  
• As the number of coronavirus cases continues to increase, the use of physical cash is coming under scrutiny as a means of spreading the virus. Last month, the PBoC began an effort to disinfect and store cash for two weeks as it injected 600 billion new cash into circulation. This could provide a stronger impetus for central banks across the world to convert to digital money.