China has sent mixed signals about its readiness to issue a national crypto. Despite the new blockchain push, there is still no timetable for the anticipated launch of the digital yuan and few details have been revealed so far. However, a senior Chinese central bank official pulled the curtain slightly this week.
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Chinese currency based on a semi-block chain will launch a "horse race"
Beijing's Electronic Cash Payment Project (DCEP), which will look like Facebook's Libra, as already indicated by Chinese officials, will only partially use the technology of the blockchain, as it would require a superior transaction capacity to be adopted by retailers. The People's Bank of China (PBOC) will use a two-tier approach in its implementation, first issuing the currency to the commercial banks, which will then distribute it to the public.
Mu Changchun, head of the central bank's digital currency research institute, said at a Hong Kong forum that the launch would launch a "horse race" between banks and other financial institutions competing to provide better and more efficient services with the digital yuan. "The leader will occupy the entire market," Mu said. Cited by Reuters, he added that if an institution took the lead, the technology it used would be adopted by others.
The representative of PBOC pointed out that as the new digital currency was designed to replace coins and paper banknotes in circulation, the holders of that currency would not receive any interest payments. This means that the DCEP system will not affect inflation in the People's Republic and the monetary policy of its government. At the same time, the project will allow Chinese regulators to better control cash flows over the traditional financial system.
The ability to exercise greater control over financial transactions, including cross-border credit transfers, is one of the main drivers of the digital yuan project. According to Mu Changchun's statement, Beijing reiterates that currencies such as Libya would pose a threat to the country's monetary sovereignty and could facilitate illegal flows. The head of the central bank pointed out that other stable currencies should comply with China's foreign exchange regulations.
Beijing aims to have the first CBDC
Protecting China's monetary sovereignty is a motive that Mu Changchun pointed out a few months ago. At a conference in September, he pointed out that the problem of currencies issued by platforms such as Wechat and Alipay is that a bankruptcy is still a possibility for businesses and that users may lose money. l & # 39; money. He assured that the digital currency issued by the People's Bank would be just as secure as paper money and revealed that the digital yuan would even work offline.
A month earlier, the senior official had said that the government-sponsored piece was ready after five years of research and development and that the PBOC would soon deploy crypto. However, PBOC Governor Yi Gang later said the bank did not have a launch schedule. Nevertheless, China is preparing to become the first country with a digital currency issued by a central bank (CBDC) and must hurry because, according to a report by the Bank for International Settlements (BIS), 70% of central banks surveyed are exploring the issue of the CBDC.
There has been a lot of talk and pressure recently in the United States and the European Union to accelerate research and development in the same direction. The BRI study released early this year concluded that five projects had moved to the pilot phase. Since then, some banks have gone further in the development of their systems and it turns out that China may not be the first to deploy digital fiduciary money.
According to a report published by Izvestia, the Tunisian central bank has already published a CBDC based on a Russian blockchain platform called Universa and even performed test transactions on November 7th. The digital dinar can be used in mobile payments online and Tunisia hopes to implement this solution. in international regulations in the future. By introducing cryptocurrency, the country's central bank hopes to save money on printing paper bills.
When do you think the People's Bank of China will issue its digital yuan? Share your thoughts on CBDCs in the comments section below.
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