The central bank affirms the positive role of digital currency

Sheng Songcheng, director of the Survey and Statistics Department of the People's Bank of China, pointed out at the first Big Data Finance Forum on the 24th that based on the current technological development, the central bank's digital currency may improve the effectiveness of money supply and monetary policy in the following aspects.

First, the central bank’s digital currency can provide a huge data foundation for monetary policy and macro-prudential policy, enabling regulatory authorities to collect real-time transaction books of different frequencies and institutions as needed, and they are complete and authentic. Such information advantages can help the central bank use policy tools more accurately and flexibly.

Secondly, the central bank's digital currency technology can track the flow of funds and help regulatory authorities comprehensively monitor and assess financial risks. Finally, the central bank's digital currency technology is conducive to the interest rate transmission of monetary policy. Digital currency technology supports "point-to-point" payment and settlement, which can improve the liquidity of market participants. Only the central bank's digital currency that is widely accepted by the whole society can radiate this advantage to participants in different financial markets, thereby improving the liquidity of financial markets. This will make the interest rate term structure smoother and the interest rate transmission mechanism smoother.