Xinhua

China is aiming to upgrade its domestic retail system by further developing its digital currency. Gradual steps will expand its use via trials, according to the country's monetary authorities and experts.

The development of the digital yuan initially targets China's vast retail market of 1.4 billion people, said Zhou Xiaochuan, former governor of the People's Bank of China, the country's central bank.

"We hope to offer the public a more convenient and effective payment method via technological progress," Zhou told a sub-forum of the ongoing Boao Forum for Asia annual conference. Zhou is also the vice-chairman of the forum.

China began piloting its digital currency in selected regions across the country at the end of 2019. The currency is expected to be issued by the country's central bank and legally backed by the government as an alternative to paper money.

During the pilot programs in cities including Beijing, Shenzhen, and Suzhou, businesses such as groceries, daily necessities, and catering, among others, already supported payments using the digital yuan.

The trials have so far been very successful, according to Li Bo, deputy governor of the central bank. Li particularly noted that controllable anonymity, an ideal feature of the digital yuan, has been realized to both help protect user privacy and stamp out financial crimes.

China will steadily advance the research and development of digital currencies and actively participate in the formulation of international rules and technical standards. These rules apply to data security, digital currencies, and data tax, according to the outline of the country's 14th five-year plan for national economic and social development and the long-range objectives through the year 2035.

"There is no detailed timetable on the progress of the digital yuan," said Li. He added that there are still things to be done before the nationwide rollout of the digital currency, including increasing the number of trials and expanding its scope.

Li said authorities are considering launching trials in more cities and having them cover more usage scenarios to enhance the eco-system of the digital yuan.

Efforts will also go into boosting the infrastructure for the yuan's digitalization to improve the security and reliability of the system and to establish a legal and regulatory framework to monitor relevant businesses, Li told the forum.

Zhou, meanwhile, stressed that both digital currencies and digital assets should closely serve the real economy, which is a substantial consideration in China's financial regulatory policy creation.

Speaking of the use of central bank digital currencies in cross-border payments, Zhou highlighted its complexity as every country needs to ensure its monetary sovereignty.

"The priority of the yuan's digitalization is currently to promote its domestic use," said Li.

China will cooperate with global partners to work out a cross-border payment solution for digital currencies over time, Li said.