PBOC's Strategic Plan: Digital RMB and Global Settlements
The People's Bank of China (PBOC) announced its digital currency strategy on October 31, detailing plans for the internationalization of the Renminbi (RMB) by 2025. This initiative aims to enhance the RMB's global use, impacting cross-border payments and positioning China as a significant player in digital currency infrastructure.
The PBOC plans to establish an independent and controllable RMB cross-border payment system. It intends to utilize the digital RMB in cross-border settlements and has engaged five central banks in its central bank digital currency (CBDC) bridge initiative. This strategic move is part of China's broader agenda to assert its digital influence on the international stage.
By expanding the digital RMB's cross-border usage, the PBOC seeks to improve liquidity and accelerate the RMB's global adoption. This development could influence the demand for stablecoins and reshape global fiat payment corridors. Analysts suggest that these actions may also have indirect effects on Layer 1 cryptocurrencies.
"The People’s Bank of China will build an independent and controllable RMB cross-border payment system, research and promote the use of the digital RMB in cross-border payments, and strengthen the supervision of cross-border RMB business." — People’s Bank of China (PBOC) Official Report
Global Currency Dynamics and Technological Implications
In a notable development for its internationalization strategy, the RMB's inclusion in the International Monetary Fund's Special Drawing Rights basket in 2015 marked a significant milestone. This historical event is now further amplified by China's recent initiatives in digital currency development.
The Coincu research team observes that the PBOC's strategic steps have the potential to significantly alter the global digital currency landscape. An increased use of the RMB could challenge the dominance of the US dollar in Asian markets and potentially diminish the influence of stablecoins, signaling a substantial shift in financial dynamics with possible technological ramifications for CBDCs worldwide.
