Cyberspace Administration of China: Encourages financial institutions to explore the use of digital yuan and other means for cross-border payments

    Cyberspace Administration of China Seeks Public Comments

    Encourages Financial Institutions to Explore Cross-Border Payments Using Digital Yuan and Other Innovative Payment Methods

    On the evening of September 13, the Cyberspace Administration of China announced that to promote and standardize the application of electronic documents, enhance the digitalization of goods trade and transportation, reduce logistics costs across society, safeguard the legitimate rights and interests of parties involved in electronic document activities, and protect national security and public interests, the Cyberspace Administration of China, in conjunction with relevant departments, has drafted the “Regulations on Promoting and Standardizing the Application of Electronic Documents (Draft for Comment).” The draft is now open for public comment.

    Among the most notable provisions is the encouragement for institutions and enterprises in goods trade, logistics, finance, and other sectors to recognize and utilize electronic documents in their operations. This aims to elevate the digitalization of business applications and drive industry-wide quality and efficiency improvements. Financial institutions are also encouraged to explore the use of new payment methods like digital RMB for cross-border payments, based on the characteristics of electronic documents, while ensuring compliance with laws and regulations and maintaining controllable risks. This initiative supports the active and prudent innovation of financial products and service models.

    Recently, several major developments concerning the digital yuan have emerged.

    On September 13, Mu Changchun, Director of the Digital Currency Research Institute of the People's Bank of China, stated that to align money supply with economic growth and price expectations while boosting the enthusiasm of commercial banks and users, the measurement framework for the digital yuan should be upgraded. He also mentioned that technologies such as coin strings and a unified global ledger could better serve the development of the real economy.

    On September 4, the General Office of the State Council issued the “Opinions on Unleashing Sports Consumption Potential and Further Promoting High-Quality Development of the Sports Industry,” proposing to encourage eligible regions to issue digital yuan sports consumption vouchers.

    On August 1, the central bank announced that cross-border payment scenarios for digital yuan and multilateral central bank digital currency bridges are continuously expanding, with ongoing advancement in digital yuan R&D and application. Efforts to strengthen digital yuan infrastructure construction and promote its adoption are intensifying.

    On July 24, the Shanghai Headquarters of the People's Bank of China announced the advancement of comprehensive reform pilot programs for offshore trade financial services among qualified banks and enterprises. This initiative aims to broaden policy coverage and actively explore the application of digital yuan in offshore trade settlements.

    On June 18, the central bank announced the establishment of the Digital Yuan International Operations Center. This center will promote the internationalization of digital yuan operations and financial market business development while supporting digital financial innovation.

    A previous research report by CITIC Securities pointed out that global cross-border payment models primarily include four categories: correspondent banking, interconnection, single platform, and peer-to-peer. The SWIFT-based correspondent banking model dominates cross-border payments. In the global context, various segments of cross-border payment systems—such as the Cross-border Interbank Payment System (CIPS), digital RMB, and currency bridges—may encounter development opportunities.

    A recent research report by Galaxy Securities highlighted that amid frequent geopolitical conflicts, the financial sector urgently needs to strengthen prevention and containment of financial risk transmission while maintaining openness.

    First, geopolitical conflicts trigger capital flow volatility through investor risk aversion, causing sharp fluctuations in stock markets, foreign exchange markets, and commodity prices. Second, escalating financial sanctions in geopolitical rivalries directly threaten the global business capabilities of Chinese financial institutions. This necessitates that China, while advancing financial opening-up, continuously monitor the potential impacts of geopolitical conflicts, international economic conditions, and major developments involving foreign financial institutions' parent companies and their regions of origin. It requires preventing the transmission of cross-border financial risks and providing hedging tools for equity assets under geopolitical tensions. Simultaneously, this compels China to accelerate the construction of systemic resilience, including the Cross-border Interbank Payment System (CIPS) and the cross-border application of digital renminbi.

    Appendix: Notice from the Cyberspace Administration of China on Soliciting Public Comments Regarding the “Regulations on Promoting and Standardizing the Application of Electronic Documents (Draft for Comment)”