Big moves for Digital RMB: What game is the central bank playing next?

At the end of last month, after an important meeting, the market observed that the central bank has been intensively advancing a series of initiatives. By carefully examining the timeline and logical relationships of these actions, we can gain a clearer understanding of the central bank’s true strategic intentions.

Accelerating the Internationalization of the Renminbi

In early this month, the central bank authorized DBS Bank to serve as the renminbi clearing bank in Singapore, which is not an isolated event. As an Asian financial center, Singapore’s strategic position is self-evident, and DBS Bank, as the largest commercial bank in the region, carries even more weight. Currently, the central bank has authorized 32 renminbi clearing banks across 29 countries and regions, and the internationalization process is accelerating.

This timing is critical—within just two weeks, the central bank has moved from expanding the renminbi clearing network abroad to launching a series of supporting measures domestically, with a very tight pace.

Coordinated Domestic Policy Push

On the 12th, the Ministry of Commerce and two other departments issued a notice emphasizing the coordinated efforts of commerce and finance to boost consumption. With the central bank and the State Administration of Financial Supervision as the main participants, this is less a consumer policy and more a comprehensive mobilization of the financial system.

More importantly, there are reports this December that digital renminbi will start accruing interest from next year.

The logic behind this series of actions is very clear—the central bank is using systematic policy tools to promote the application and popularization of digital renminbi. This combination is not just about upgrading settlement tools but about reconstructing the entire financial ecosystem.

Why Is This Being Done?

The rapid global expansion of stablecoins has exceeded expectations, posing real challenges to the sovereign currency system. The central bank needs a comparable solution, and the answer from digital renminbi is: use CBDC to counter stablecoins.

CBDC is the central bank’s version of digital currency, employing blockchain technology but issued by the central bank, which provides the credit backing that stablecoins lack. More importantly, the central bank holds the full mechanism design rights for digital renminbi.

New Possibilities Brought by Smart Contracts

The killer feature of digital renminbi is its smart contract functionality. Suppose you pay tuition to an educational training institution—under traditional methods, once the money is transferred, it’s out of control. But with digital renminbi’s smart contracts, it’s different:

The amount of money released automatically corresponds to the courses taken. If the merchant runs away halfway, the funds cannot be taken away because they are constrained by pre-set conditions from start to finish.

This logic applies across various industries:

• The procurement smart credit contract wallet developed by Bank of Communications
• The shared leasing enterprise fund supervision contract developed by Agricultural Bank of China
• Government subsidies directly reaching funds with traceable chains

These applications are essentially a nationwide leverage reduction tool, with significant implications for preventing financial risks.

A New Dimension in the Dual Circulation Strategy

The central bank’s approach can be summarized in four words: both domestic and international efforts.

Expanding the renminbi clearing network abroad to gradually enhance its position in international settlement; promoting digital renminbi application scenarios domestically to increase usage frequency and settlement volume.

This is not just a currency upgrade but a reconstruction of the entire financial infrastructure. Judging by the rapid adoption of QR code payments, similar financial innovations in China can quickly permeate all levels of society. The future trajectory of digital renminbi may be no different.

Rather than saying the central bank is competing with stablecoins, it’s more accurate to say that the central bank is building its own digital financial system with a completely different logic—something stablecoins cannot achieve.