The digital renminbi is legally compensatory to China’s fiat currency.
In an opinion article on Sept. 14, Fan Yifei, a deputy governor of the People’s Bank of China (PBoC), outlined the major regulatory principles for the operation of the digital yuan. the digital representation of the official currency of the People’s Republic of China.
According to Fan, the digital renminbi is legally compensatory to the traditional fiat currency. In the article, the deputy governor outlined that the digital RMB is “mainly positioned” as M0, which means that the digital currency is part of the supply of paper notes and coins. As such, the digital RMB “needs to comply with laws and regulations related to cash management”, Fan said.
The deputy governor went on to say that according to the renminbi’s indemnity provisions, the digital renminbi could be used to pay “all public and private debts within the territory of our country.” Fan emphasized that the digital currency should be accepted everywhere in the country, and “no unit or individual may refuse to accept it if the conditions are met.”
Fan also said that the digital renminbi must comply with laws and regulations on cash management, Anti-Money Laundering and combatting terrorist financing.
The digital yuan is reportedly being piloted in a number of regions in China including Beijing, Tianjin, Hebei, as well as the Hong Kong Greater Bay area. In late August, Reuters reported that the PBoC is planning to use the digital currency at the 2022 Winter Olympic Games.