China Kills Rumor of Hasty Central Bank Digital Currency Launch
The People’s Bank of China (PBOC) has no timetable on when it will launch its digital currency. This is according to the bank’s governor, Yi Gang, who revealed that the bank was taking its time to research, test, evaluate, and prevent related-risks before releasing the digital currency to the public.
First reported by The Global Times, an English daily under the state-run People’s Daily, the statement effectively stamps out rumors of China hastening the launch of its digital currency ahead of Facebook’s much-publicized cryptocurrency, Libra.
An excerpt from the report read:
Yi said that there is no presupposition for a tech roadmap of digital currency R&D, and that blockchain (a digital, public ledger that records online transactions) will be considered to develop a digital currency.
What we know about the new Chinese currency
The PBOC has been interested in digital currencies since 2014. The goal of the new digital currency was to help the bank cut the cost of circulating physical currencies throughout the country. The currency will also support the circulation and internationalize of the yuan.
The new currency will aim to replace MO and not M1 and M2. MO is the currency which is in circulation, while M1 refers to MO plus demand deposits. M2 currency would create credit, which would affect the monetary policy.
The pace of the development has accelerated in recent months after Facebook unveiled its plans to launch its cryptocurrency in 2020.
Reports from China have said that the PBOC will use at least seven financial institutions to distribute the currency. Some of these companies will be Ant Financial, UnionPay, Industrial and Commercial Bank of China (ICBC), and China Construction Bank.
A report by Forbes previously claimed that the currency could be launched as soon as Singles Day on November 11.
How China’s digital currency will work
China’s digital currency will be different from the existing decentralized digital currencies like Bitcoin and Monero. Instead, it will be a centralized currency, controlled by the PBOC.
Users will need to download a mobile wallet and exchange their yuan for the currency. They can transact in payments and transfers using the digital currency and the wallet.
Today, most people in China use digital wallets provided by Tencent and Alibaba for everything from shopping, remittance, payments and more. It will also be interesting to see how the currency will be used internationally.
The launch of new currency comes at a time when Chinese authorities are increasing surveillance on its citizens. This currency will help Beijing keep track of the peoples’ activities.
Interestingly, the new statement on the currency came on a day when the country announced that it would have government officials in 100 biggest companies. According to government sources, the directive is in line with the government’s “New Manufacturing Plan.” Still, analysts believe that this is a form of government surveillance, which could increase when the digital currency launches.