London Daily

Focus on the big picture.
Friday, Aug 22, 2025

China moves to legalise digital yuan, ban competitors with new draft law

China moves to legalise digital yuan, ban competitors with new draft law

Head of the central bank’s digital currency research institute acknowledges potential problems with digital yuan, but says these reinforce the need for central bank oversight.


The People’s Bank of China, shown here in Beijing, has published a draft law that would give legal status to the Digital Currency Electronic Payment (DCEP) system.

China is inching closer to the launch of its own sovereign digital currency by giving it a legal foundation in an upcoming law revision, while the central bank is also addressing problems that emerged in pilot tests for the digital yuan.

The People’s Bank of China (PBOC) published a draft law on Friday that would give legal status to the Digital Currency Electronic Payment (DCEP) system, and for the first time the digital yuan has been included and defined as part of the country’s sovereign fiat currency.

The draft law would also forbid any party from making or issuing yuan-backed digital tokens to replace the renminbi in the market.

Mu Changchun, head of the central bank’s digital currency research institute, said on Sunday at the Bund Summit in Shanghai that the DCEP will be allowed to circulate and be converted like physical banknotes and coins.

“Its centralised management will be good to fight against cryptocurrencies and global stablecoins and prevent their erosion of currency-issuance rights,” he said.

China released its design framework for the digital yuan soon after Facebook unveiled its ambitious Libra token project in the summer of last year, with plans for a two-tier issuance structure and a focus on small retail application scenarios.


China appears to be the front runner in the race to issue the world’s first digital currency, having conducted a series of trials in four cities – Suzhou, Shenzhen, Chengdu and Xiongan – as well as at venues for the 2022 Winter Olympics in Beijing.

Earlier this month, a district in Shenzhen, just across the mainland border from Hong Kong, gave away 50,000 digital “red packets”, totalling 10 million yuan (US$1.5 million), to local residents in the largest-scale test so far.

The central government has made it clear that the goals of the DCEP include replacing cash, maintaining government control over the currency and creating as many small retail application scenarios as possible. China is also looking to internationalise the yuan by enhancing its use in international settlements.

However, there are some domestic concerns over the planned digital coin, particularly in terms of its convertibility, privacy and safety.

Mu touched on potential pitfalls of the digital yuan on Sunday, pointing to how accessible it would be to underprivileged groups, and to the risks associated with fake e-wallets. But these concerns, he said, reinforce the need for central bank oversight.

“The PBOC will also face anti-counterfeit issues in the digital era, and we must lower the cost,” he said, adding that the central bank will be asked “to coordinate the construction of digital currency application scenarios for the purpose of identification”.

What are cryptocurrencies?


Meanwhile, “we are also developing a digital yuan product that is suitable for senior citizens and those who don’t use smart terminals”, he said.

Mu also mentioned that unified technological criteria, safety standards, business protocols and financial infrastructures are needed to ensure connectivity between different agencies and to prevent payment barriers.

Amid market speculation that the government-led project could threaten the current dominance of privately run mobile payment tools, the official said they should join hands in enriching the applications.

“WeChat Pay and Alipay are just [electronic] wallets, while the DCEP is the money inside them,” he said. “They are not competitors.”

Newsletter

Related Articles

0:00
0:00
Close
Ukraine Declares De Facto War on Hungary and Slovakia with Terror Drone Strikes on Their Gas Lifeline
Animated K-pop Musical ‘KPop Demon Hunters’ Becomes Netflix’s Most-Watched Original Animated Film
New York Appeals Court Voids Nearly $500 Million Civil Fraud Penalty Against Trump While Upholding Fraud Liability
Elon Musk tweeted, “Europe is dying”
Far-Right Activist Convicted of Incitement Changes Gender and Demands: "Send Me to a Women’s Prison" | The Storm in Germany
Hungary Criticizes Ukraine: "Violating Our Sovereignty"
Will this be the first country to return to negative interest rates?
Child-free hotels spark controversy
North Korea is where this 95-year-old wants to die. South Korea won’t let him go. Is this our ally or a human rights enemy?
Hong Kong Launches Regulatory Regime and Trials for HKD-Backed Stablecoins
China rehearses September 3 Victory Day parade as imagery points to ‘loyal wingman’ FH-97 family presence
Trump Called Viktor Orbán: "Why Are You Using the Veto"
Horror in the Skies: Plane Engine Exploded, Passengers Sent Farewell Messages
MSNBC Rebrands as MS NOW Amid Comcast’s Cable Spin-Off
AI in Policing: Draft One Helps Speed Up Reports but Raises Legal and Ethical Concerns
Shame in Norway: Crown Princess’s Son Accused of Four Rapes
Apple Begins Simultaneous iPhone 17 Production in India and China
A Robot to Give Birth: The Chinese Announcement That Shakes the World
Finnish MP Dies by Suicide in Parliament Building
Outrage in the Tennis World After Jannik Sinner’s Withdrawal Storm
William and Kate Are Moving House – and the New Neighbors Were Evicted
Class Action Lawsuit Against Volkswagen: Steering Wheel Switches Cause Accidents
Taylor Swift on the Way to the Super Bowl? All the Clues Stirring Up Fans
Dogfights in the Skies: Airbus on Track to Overtake Boeing and Claim Aviation Supremacy
Tim Cook Promises an AI Revolution at Apple: "One of the Most Significant Technologies of Our Generation"
Apple Expands Social Media Presence in China With RedNote Account Ahead of iPhone 17 Launch
Are AI Data Centres the Infrastructure of the Future or the Next Crisis?
Cambridge Dictionary Adds 'Skibidi,' 'Delulu,' and 'Tradwife' Amid Surge of Online Slang
Bill Barr Testifies No Evidence Implicated Trump in Epstein Case; DOJ Set to Release Records
Zelenskyy Returns to White House Flanked by European Allies as Trump Pressures Land-Swap Deal with Putin
The CEO Who Replaced 80% of Employees for the AI Revolution: "I Would Do It Again"
Emails Worth Billions: How Airlines Generate Huge Profits
Character.ai Bets on Future of AI Companionship
China Ramps Up Tax Crackdown on Overseas Investments
Japanese Office Furniture Maker Expands into Bomb Shelter Market
Intel Shares Surge on Possible U.S. Government Investment
Hurricane Erin Threatens U.S. East Coast with Dangerous Surf
EU Blocks Trade Statement Over Digital Rule Dispute
EU Sends Record Aid as Spain Battles Wildfires
JPMorgan Plans New Canary Wharf Tower
Zelenskyy and his allies say they will press Trump on security guarantees
Beijing is moving into gold and other assets, diversifying away from the dollar
Escalating Clashes in Serbia as Anti-Government Protests Spread Nationwide
The Drought in Britain and the Strange Request from the Government to Delete Old Emails
Category 5 Hurricane in the Caribbean: 'Catastrophic Storm' with Winds of 255 km/h
"No, Thanks": The Mathematical Genius Who Turned Down 1.5 Billion Dollars from Zuckerberg
The surprising hero, the ugly incident, and the criticism despite victory: "Liverpool’s defense exposed in full"
Digital Humans Move Beyond Sci-Fi: From Virtual DJs to AI Customer Agents
YouTube will start using AI to guess your age. If it’s wrong, you’ll have to prove it
Jellyfish Swarm Triggers Shutdown at Gravelines Nuclear Power Station in Northern France
×