Bank of China builds digital RMB international center

The People’s Bank of China has officially established the Digital RMB Operation and Management Center as the nation prepares its digital currency for widespread adoption.

According to a recent report by Chinese media Capital Finance, the Governor of the central bank Pan Gosheng said that a digital RMB operation and management center will be established in Beijing. The center will be responsible for the construction, operation and maintenance of the digital RMB system.

In addition, the unit will also be promoting the development of China’s digital currency and assisting in the construction of Beijing’s national financial management center. This marks the second established unit meant to manage the digital RMB, after the Operation Management Center was established last month.

Dubbed the International Operations Center, the unit will focus on building and operating the digital RMB’s cross-border and blockchain infrastructure, while promoting cross-border interconnection with domestic and foreign financial infrastructure.

Meanwhile, the Operations Management Center focuses more on improving domestic infrastructure for the utilization of digital RMB, such as adopting new local technologies, and ensuring long-term growth within the financial system.

Experts believe that the Operations Management Center and the International Operations Center could work together to create a well-organized and cooperative system for the digital yuan. The two units will form a “two-wing” structure that supports both local and international development for the digital RMB.

Most recently, the Hong Kong Monetary Authority has been mapping out ways to implement the digital Hong Kong dollar or e-HKD after the project concluded the second phase of its pilot program. The special administrative region plans to prioritize launching the central bank digital currency for institutional clients, as demand mounts for e-HKD specifically for cross-border transactions.

Bank of China bets on RMB-backed tokens

Based on the recent development’s emphasis on cross-border transactions, it is clear that the Bank of China intends for the digital RMB project to boost global usage of the Renminbi. Just a day prior, the Bank of China announced that it plans to do more to push the internationalization of the yuan.

The plan includes efforts to expand the currency’s use in global trade and a two-way opening of financial markets in a timely manner to further promote offshore usage of the yuan. Other plans involve establishing Shanghai and Hong Kong as international financial centers, continuing to build a cross-border yuan payment system described as “independent, controllable with multiple channels and a wide coverage.”

The Bank of China’s new strategy is aligned with Beijing’s initial push for yuan-backed stablecoins as a way to challenge the U.S dollar’s domination on the stablecoin market.

According to JPMorgan’s prediction, the stablecoin market could potentially lift global demand for the U.S. dollar instead of devaluing the fiat currency. The bank predicts that the stablecoin market could generate as much as $1.4 trillion in demand for U.S dollars by 2027.

This comes as no surprise, considering the largest stablecoin on the market is pegged to the U.S dollar. According to data from DeFi Llama, nearly 60% of the total $308.26 billion market value on the stablecoin market comes from Tether’s USDT (USDT).