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2020 Annual Meeting: China’s Central Bank to Forge Ahead Development of Fiat Digital Currency

The 2020 annual meeting of China’s central bank (PBOC) was held in Beijing from January 2 to 3, on which the current economic and financial situation was analyzed and key work in 2020 was deployed.

‘The research and development of fiat digital currency is going smoothly’, China’s central bank will keep maintain a sound monetary policy that is flexible and appropriate, and resolutely prevent and resolve major financial risks. Focusing on alleviating the financing difficulties of small business, China’s central bank will strengthen the structural reform of financial support supply side.

Industry insiders believe that China’s central bank might reduce the standard comprehensively or directionally in 2020. The central bank is likely to implement another one to two reductions with a total of 1.0 to 1.5 percentage points; during this period. In order to increase the support for small business, the central bank may also implement two targeted reduction operations.

The meeting also made specific arrangements for macro-prudential management. It pointed out that a macro-prudential stress test system should be established to accelerate the establishment of a macro-prudential management mechanism for cross-border capital flows that integrates local and foreign currencies. It will also organize and implement the evaluation of systemically important banks and promote the promulgation of the supervision and management measures for financial holding companies.

In terms of application of financial technology, the meeting proposed to implement the development plan of financial science and technology, committed to the pilot work of financial science and technology innovation supervision, and continue to steadily promote the research and development of fiat digital currency.

On November 28, Fan Yifei, the deputy governor of the People’s Bank of China said at “the eighth China Payment and Settlement Forum” that the central bank has basically completed the top-level design, standard-setting, function R&D, integrated testing related to its legal digital currency DCEP.

Early in October, an official from Chinese government think tank said China’s central bank is expected to issue its state-endorsed digital currency first, and he believed that Facebook’s Libra is doomed to fail.

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