China has issued a digital version of its yuan currency. Photo: AFP / Fred Dufour

The former vice president of the People’s Bank of China envisions an expansive role for the digital yuan and other central bank digital currencies (CBDCs).

Wang Yongli, who is now a director of the Haixia Blockchain Research Institute, said digital currencies are certainly a viable substitute for cash but stressed that the applications can be much broader, Global Times reports.

Wang said digital currencies can be used to reshape monetary structures. This could include the establishment of “basic accounts” for all social entities on a central bank’s digital currency platform – enabling the institution to supervise digital currencies without having a significant impact on the current financial system.  

He added that having a CBDC will improve the effectiveness of monetary policy by preventing the excessive printing of physical money.

China is leading the way in the development of the financial technology, which a number of countries including Japan are currently exploring.