China's central bank promotes blockchain and stablecoins as solution to payments

People’s Bank of China (PBoC) governor, Pan Gongsheng, emphasized blockchain’s role and distributed ledgers for global payments at the Lujiazui Forum event on June 18.

Pan said China will establish an international operation center for the digital RMB. This is to promote the international use of digital currency, strengthen financial market services, and support widespread digital finance innovations.

Blockchain development in this area extends a wider trend, bringing tech capabilities for financial advancement.

Pan Gongsheng highlights China’s position at the forefront of digital currency innovation

The Lujiazui Forum, an event in the financial industry organized by China’s leading financial regulators and the Shanghai municipal government, focused on “financial opening-up and cooperation for high-quality development in a changing global economy.” 

During the event, key central financial regulators were expected to unveil important financial policies. Officials from top regulatory bodies like the National Financial Regulatory Administration and the China Securities Regulatory Commission attended.

Notable speakers included Pan Gongsheng, Zhu Hexin (Deputy Governor of the PBoC and Director of the State Administration of Foreign Exchange), Li Yunze (Minister of the National Financial Regulatory Administration), and Wu Qing (Chairman of the China Securities Regulatory Commission). 

Pan delivered a keynote address that blockchain speeds up the growth of stablecoins and changes cross-border payments. According to him, this technology is changing traditional systems by allowing instant settlements. However, the governor of the People’s Bank of China highlighted that the system also brings new challenges for regulations.

The upgrade concerns smart contracts and decentralized finance, indicating an interest in moving payment systems forward without being dependent on traditional systems.

Zhou Xiaoquan, the executive deputy director of the Shanghai Municipal Bureau of Finance, said that Shanghai will support central financial regulators to enhance China’s high-level financial openness gradually. 

The central bank’s digital currency stablecoin was also mentioned, which is believed to facilitate cross-border payments.

Li Kexin, the deputy director of the PBoC’s general office, mentioned at a press conference in late May that the central bank is speeding up its efforts to boost policy reserves. This move aims to strengthen Shanghai’s position as an international financial center.

Even with these important announcements, other global financial organizations did not give any direct replies. 

However, the spotlight on blockchain still continues to highlight China’s position at the forefront of digital currency innovation, according to the official agenda of the Lujiazui Forum.

China’s innovation in crypto solidifies its position as a fintech leader in Asia

China has a long history of leading in digital finance. Events like those held in Lujiazui often highlight important progress in blockchain and digital currency, strengthening China’s position as an Asian fintech leader. 

The Lujiazui Forum has shown how China’s financial growth has progressed for many years. The terms “reform” and “opening up” are important topics at the forum, featuring in the themes of almost half of its past sessions. 

As stakeholders, industry leaders and researchers discuss their views and ideas at the forum, they address concerns on how to handle the global financial crisis, ways for the financial sector to support the real economy better, issues with liquidity in Chinese banks, and methods to avoid systemic risks, among others. 

Analysts believe shifting to blockchain for payments might increase trust among institutions in cryptocurrency systems. This has the potential to develop stablecoins and is a strategic move for financial modernization in China. 

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