According to Sina.com, a national cryptocurrency of the Central Bank of China is about to enter the market.
This was stated by the Deputy Director of the Central Bank’s payment department, Mu Changchun, on the occasion of the China Finance Forum held a few days ago.
Changchun reportedly said that the PBOC had been researching the digital currencies since 2014 and that it would be ready to launch a proprietary one.
The digital currency, which in the strict sense would not be a cryptocurrency to all intents and purposes, would have a “two-tier system”, which means that the issuance would be the responsibility of the central bank itself, but once issued it would be distributed to the public by commercial banks or other government agencies.
In other words, to some extent, it would be an architecture similar to Libra’s, issued by the Calibra Association, but tradable only through third-party platforms.
This architecture, according to Mu Changchun, would allow avoiding an excessive concentration of risks and too much financial disintermediation.
Moreover, this way neither the debt in currency nor the volume of the currency in circulation will change, considering that the commercial institutions that will want to use it will have to pay to the central bank a reserve in traditional currency equal to 100% of the amount of the digital currency that they will receive.
The goal is purely technical: to replace the M0 money supply, namely banknotes and coins, with the central bank’s digital currency in order to improve the efficiency of payments.
It is not yet clear whether this digital currency will be based on blockchain or DLT, but considering the objections raised by Mu Changchun regarding scalability, it is reasonable to assume that it may not be.
The Chinese central bank has revealed the details of a plan to issue a blockchain-based digital fiat currency and it seems that it is bringing together a number of resources and staff to speed up the process.
At this point, it becomes more and more likely that, at last, China will get rid of the current cryptocurrency ban that has been in place in the country for almost two years now.