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International Monetary Fund. Asia and Pacific Dept

Recent Developments and Macro-financial Implications of the E-CNY 1 The e-CNY pilot tests have been expanded to more regions and scenarios, including in rural areas and across borders, although there is still no timetable for the official national rollout. This chapter discusses the recent e-CNY developments and explores the key macro-financial benefits and risks from its domestic and cross-border uses, which should be carefully studied and assessed before the official rollout . A. Recent Developments 1. The development of the e-CNY continues

Gabriel Soderberg, Ms. Marianne Bechara, Wouter Bossu, Ms. Natasha X Che, Sonja Davidovic, Mr. John Kiff, Ms. Inutu Lukonga, Mr. Tommaso Mancini Griffoli, Tao Sun, and Akihiro Yoshinaga
Central banks are increasingly pondering whether to issue their own digital currencies to the general public, so-called retail central bank digital currency (CBDC). The majority of IMF member countries are actively evaluating CBDCs, with only a few having issued CBDCs or undertaken extensive pilots or tests. This paper shines the spotlight on the handful of countries at the frontier in the hope of identifying and sharing insights, lessons, and open questions for the benefit of the many countries following in their footsteps. Clearly, what can be gleaned from these experiences does not necessarily apply elsewhere. The sample of countries remains small and country circumstances differ widely. However, the insights in this paper may inspire further investigation and allow countries to gain time by building on the experience of others. Importantly, the purpose of this paper is not to evaluate the courses taken by different jurisdictions, but to study and discuss their key experiences and lessons. The paper studies six advanced CBDC projects, drawing on collaboration and exchanges with the respective central banks to get insights beyond what has previously been published. Unless a specific published source is cited, all information stems from interviews and workshops with members of CBDC project teams in each jurisdiction.
International Monetary Fund. Asia and Pacific Dept

-up Productivity Estimates from Manufacturing Firm-level Data C. Five Facts about China’s Declining Business Dynamism D. Regional Heterogeneity and Business Dynamism E. Reform Priorities References RECENT DEVELOPMENTS AND MACRO-FINANCIAL IMPLICATIONS OF THE E-CNY A. Recent Developments B. Key Macro-financial Benefits and Risks in Domestic Use … C.… and in Cross-Border Use References RECENT TRADE AND INVESTMENT AGREEMENTS AND THEIR IMPLICATIONS FOR REFO RM A. Introduction B. China’s Reform Experience in the Context of WTO Accession C. Key Reform

Gabriel Soderberg, Ms. Marianne Bechara, Wouter Bossu, Ms. Natasha X Che, Sonja Davidovic, Mr. John Kiff, Ms. Inutu Lukonga, Mr. Tommaso Mancini Griffoli, Tao Sun, and Akihiro Yoshinaga

system. However, it continues to build the technical capacity to issue a CBDC, and monitor developments that could increase its urgency. PBOC, e-CNY : No formal decision has been taken to launch the e-CNY. The PBOC runs a pilot in parallel in different regions. By October 2021, there were over 123 million e-CNY wallets registered with individuals and about 9.2 million wallets held by firms-a rapid increase from approximately six million active e-CNY wallets in April 2021. In a population of nearly one and a half billion, the share of e-CNY users is now approaching 10

International Monetary Fund. Asia and Pacific Dept

has 180 million rural workers in the agriculture sector, which account for 23% of the whole population. At least half of the rural labor force will continue to transfer to non-agricultural sectors in the next decades. Central Bank Digital Currencies (CBDCs) The PBC continues to advance the research and development of the pilot e-CNY project in a prudent and orderly manner, with no preset timetable for the official rollout. The pilot program tested the business and technological designs as well as whether the e-CNY system is stable, the product is user

International Monetary Fund. Asia and Pacific Dept

China’s E-CNY, both have certain caps on transaction and balance limits to ease the crowding-out of bank deposits. 8 Table 2. Hypothetical Analytical Balance Sheets Commercial Bank Central Bank Assets Liabilities Assets Liabilities Before CBDC Introduction Loans (300) Deposits (320) Net Foreign Assets (20) Cash (20) Reserves (40) Capital [40) Claims on Other Depository Corporations (20) Reserve (40) Net Claims on Central Govt (10) Net Claims on Central Govt (10) Others (10

International Monetary Fund. African Dept.

’s Bank of China’s E-CNY, both have certain caps on transaction and balance limits to ease the crowding-out of bank deposits. 7 D. Possible Impact of Issuing RDR 17. Introducing non-interest-bearing rDR would create relatively less pressure on banks’ deposit outflows, and hence, the reduction in domestic reserves and the impact on monetary policy would be more limited . The impact on domestic liquidity and policy transmission seems to be more limited since it is more likely in this case that the end-users will be less inclined to substitute interest

International Monetary Fund. Asia and Pacific Dept

-border use of the e-CNY in Hong Kong SAR, the potential implications from a more widely adopted e-CNY in Hong Kong SAR should be carefully studied. Housing policies . The three-pronged approach—boosting housing supply, macroprudential measures, and stamp duties—to improving housing affordability and containing housing market risks remains valid. Housing supply should be increased, including by expanding land supply and expediting and streamlining the process for land identification and production. While the macroprudential stance for housing market should be maintained

International Monetary Fund. Asia and Pacific Dept

keeping the structural objectives in mind. Many countries have also adopted supportive credit measures and adjusted regulatory policies in a flexible way. Such measures are time-limited. China’s progress on structural reforms should be assessed more objectively. E-CNY The PBC is carefully designing and testing the e-CNY and advance the work in a very cautious manner, paying special attention on protection of privacy and avoiding potential negative effects. We will actively participate international communication and discussions to work on best practices