China’s Official Digital Currency is on Its Way
Mu Changchun, Deputy Chief in the Payment and Settlement Division of People’s Bank of China (PBOC) announced at the China Finance 40 Group meeting on 10 August 2019 that China’s central bank digital currency (CBDC) will soon roll out.
Since 2014 China has not stopped on working intensively on a digital cryptocurrency of its own, in contrast to its stamping out of the cryptocurrency exchanges and decentralized blockchain-based offerings in 2017.
A two-tier operation system would be adopted for the CBDC, Mu said. The People’s Bank of China would be the upper lever while the commercial banks would be the second level. The dual delivery system is adopted due to the nation’s condition-huge population, extensive territory and complex economy. In the two- tier system, PBOC would be the issuing bank, while the commercial banks would be authorized by PBOC to store and offer CBDC to the public. The system is designed to better improve public accessibility, motivate usage and smoothly improve the acceptance of digital currency.
According to Bloomberg Businessweek, the bank had 44 blockchain-related patents by August 2018 and it give hints on how the digital currency works.[1] Consumers and businesses would download a mobile wallet and swap their yuan for the digital money.
Bloomberg reported that the CBDC was a plan of China to sideline Bitcoin. In an op-ed article published by Yicai on January 26, 2019, PBOC Deputy Governor Fan Yifei stated that the purpose of CBDC is replacing M0 (notes and coins). Transaction details could be tracked which could give Beijing a higher level of control over its financial system.
[1] https://www.bloomberg.com/news/articles/2018-12-13/china-s-plan-to-sideline-bitcoin
