Make e-RMB World’s Best CBDC, Former Bank of China President Says

The head of the blockchain research team of Internet Finance Association of China, Li Lihui, has called for the digital renminbi (e-RMB) to be made the best central bank digital currency (CBDC) in the world, according to local media reports.

Lihui made the submission at the 2021 Global Wealth Management Forum where some experts discussed, among other things, the significance of the e-RMB to the development of the digital economy and the transformation of wealth management in China. 

The former President of the Bank of China urged China to pay attention to the wholesale function of e-RMB, actively participate in establishing a unified standard for international supervision of digital finance, and be wary of Facebook’s launch of its digital currency, Diem. 

He said Diem could potentially be used by more than two billion global members right from its launch thereby turning it into a global super-sovereign digital currency that could reconstruct the global financial system. 

Hence, the e-RMB has to be able to promote inclusive finance in China as well as enhance the balance and coordination of the global financial system in a digital economy era, Lihui reportedly said. It also has to enable China to maintain its monetary sovereignty, protect its financial security and its national strength.

He stressed the need to further improve the e-RMB’s underlying technical architecture and its application design scenarios though, adding that the CBDC’s large-scale use in the high-concurrency market should be ensured while promoting its internationalization. 

He also suggested the establishment of a security barrier to control decentralized finance and a joint digital financial supervision system to implement consistent compliance standards across all financial institutions, markets and businesses. 

China’s wealth has grown from US$20 trillion to US$80 trillion in the past 10 years, according to the Chief Investment Officer of China Merchants Bank, Zhao Ju, who said at the event hosted by Caijing Magazine and Caijing Think Tank between Oct 23 and 24 that China’s growth is faster than the global rate. 

Ju sees wealth management becoming “the engine of financial services, and it will definitely drive the growth of the entire financial services and financial companies” in the next 10 to 20 years. 

The outlook may explain why the Chief Economist at the Neptune Group and a former vice president of Bank of China, Wang Yongli, thinks the e-RMB is bringing about a change in its manifestation and operating mechanism that “will lay an important foundation for the future development of the digital economy.”

Yongli says the e-RMB may help the wealth management industry to better understand customers and their wealth.

“We know that wealth management requires the design of suitable wealth management products or investment portfolios for customers. This premise is that you have to know your customers very well and understand their wealth and its changes,” Yongli noted in his speech. “The promotion and use of digital renminbi may help us better understand the customer and his wealth.”

It may also help to promote digital and intelligent wealth management and supervision, further improve efficiency, reduce costs, and strictly control risk to achieve better development, he added.