China is making big strides in testing its digital currency on the world stage, with Hong Kong poised to be a vibrant center for e-CNY's use in international trade. Zhang Tianyuan reports from Hong Kong.

Digital money is a logical step in a process of continuous technological advancement in payment systems. In response, central banks are reviewing their conduct of monetary operations in light of the new shape of financial markets and systems. The impact of digital money will depend on the type of money substitution by digital money. The paper straddles several cases where substitution of CiC (currency in circulation), and bank deposits may take place via digital money such as CBDC or other e-money, and how it would impact the central bank balance sheet. Remuneration of CBDC, if aligned to a new objective, could potentially amplify the effect on the interest rate channel of monetary policy.

The Monetary Authority of Singapore (MAS) today launched Ubin+, an expanded collaboration with international partners on cross-border foreign exchange (FX) settlement using wholesale central bank digital currency (CBDC).

The central banks of Pakistan and China have signed a memorandum of understanding (MoU) on setting up yuan clearing arrangements in the South Asian country to increase the Chinese currency's usage for cross-border transactions.

September 2022

"I would like to share with you some of my thought on the Central Bank Digital Currency, or CBDC."

According to the statistics of the State Administrationof Foreign Exchange (SAFE), the Chinese foreign exchange market (excluding foreign currency pairs, the same below) recorded total transactions of RMB 23.42 trillion (equivalent to USD3.36trillion) in September 2022.

Elevated commodity prices could prolong inflationary pressures

The following are the central parity rates of the Chinese currency renminbi, or the yuan, against 24 major currencies announced on Thursday by the China Foreign Exchange Trade System:

While excluding the possibility of a one-sided performance of the renminbi exchange rate, the People's Bank of China will make continued efforts to deepen reform in the foreign exchange market and refrain from drastic ups and downs in the Chinese currency, the country's central bank said in an article released on Tuesday.

The People's Bank of China (PBC), the country's central bank, on Monday revealed an extension of its local currency swap agreement with the European Central Bank (ECB) for another three years, in a fresh sign of closer ties between the two major currencies amid mounting pressure from a strong US dollar.

China will steadily advance the process of the renminbi's internationalization and the country will make its financial market more accessible to international investors in terms of product supply and trading mechanisms to achieve the goal of lifting the global profile of the Chinese currency, industry experts said.