The former governor of the People’s Bank of China (PBoC) says the soon to be launched digital yuan will combat a global US “dollarization.”

Zhou Xiaochuan, president of the Chinese Finance Association and a former PBoC head, told attendees at a Eurasia Forum conference on October 27 that China’s digital currency approach will favor its domestic retail system. He claimed the introduction of a state-backed digital yuan would prevent the “dollarization” of the country’s economy. 

XIaochuan said: 

“We need to prevent dollarization — this is one of the major designing points of the Chinese DCEP.”

The former PBoC head continued, saying China’s focus on digital currencies deviated from that of other countries in the Group of Seven, including the U.K. and U.S.

Xiaochuan said the G7 was primarily concerned with challenges posed by non-sovereign entities, such as Facebook’s Libra, while China instead sought to prevent further global adoption of the dollar. 

Earlier in the month, China’s central bank launched a pilot program to test the digital yuan by giving away $1.5 million to 47,500 citizens in the city of Shenzhen. 

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